Housing Construction Hit Eight-Year High In 1996

Builders put up more houses and apartments in 1996 than in any year since 1988, the government said Wednesday, but the pace slowed to an 18-month low in December due partly to severe storms in the West.

Many analysts expect housing activity to moderate this year, although remaining at a relatively high level.

Meanwhile, a year-end Federal Reserve survey of regional economic activity released Wednesday showed modest overall growth in most parts of the nation with little sign of inflation except for sharply rising energy costs.

“Economic growth in December and early January was moderate in most parts of the country,” said the survey, known as the beige book because of the color of its cover.

“District reports provided scattered evidence of increasing price pressures, particularly for skilled workers, but in general did not indicate significant price pressures other than for energy items,” it said.

The Fed survey, conducted by its 12 regional banks, will be used by central bank officials when they meet Feb. 4-5 to consider monetary policy.

Many analysts expect the Federal Open Market Committee to keep interest rates steady at that meeting in light of the lack of significant signs that inflation may be rising.

The Commerce Department report said housing starts shot up 8.8 percent in 1996 to 1.47 million, the most since 1988 when foundations were dug for 1.48 million units.

They dropped 7.5 percent in 1995, to 1.35 million, the first decline since a 15.1 percent plunge in 1991 during the economy’s recovery from the last recession.

The Northeast led the 1996 advance with an 11.2 percent gain, but other regions also posted increases.

Starts in December fell 12.2 percent to a seasonally adjusted 1.33 million annual rate, lowest since a 1.30 million rate in June 1995. The drop was the steepest since a 16.7 percent fall in January 1994.

All regions shared in December’s decline, led by the West where activity plunged 29.2 percent to a 257,000 rate. There the drop was largely due to the extreme weather. For the year, starts in the West were up 8.8 percent to 360,600.

Starts were off 7.9 percent to a 302,000 rate in the Midwest in December, but up 10.6 percent to 320,800 for all of 1996. They fell 7.2 percent in the South to 645,000 for the month, but gained 7.5 percent to 661,200 for the year. In the Northeast, new construction was down 2.3 percent to a 125,000 rate in December while posting an 11.2 percent advance to 130,900 for the year.

Applications for building permits - often a barometer of future activity - slipped 0.6 percent in December, to a 1.41 million rate from 1.42 million in November.

Single-family starts, which had risen 6.7 percent in November, fell back 11.8 percent in December to a 1.02 million rate. For the year, they were up 7.8 percent to 1.16 million.

Construction of apartments and condominiums dropped 13.6 percent to a 305,000 rate after shooting up 18.9 percent in November. They jumped 12.9 percent during all of 1996 to 313,500.