Home Construction Resumes Break In Winter Weather Allows Builders To Head Back To Work

Home builders, many sidetracked by adverse weather in December, resumed laying foundations in January but at a subdued pace that many analysts expect to continue through much of the year.

Housing starts rose 2 percent in January to 1.35 million at a seasonally adjusted annual rate after dropping 11 percent a month earlier to 1.32 million, the Commerce Department reported Thursday.

“We recovered most of the December loss, which was weatherrelated,” said economist David G. Seiders of the National Association of Home Builders.

Still, Seiders and many other analysts contend the housing market will cool slightly this year after what some consider an overheated situation in 1996.

“The weakening is actually welcomed because there was too much building last year,” said Mark Zandi, an economist with Regional Financial Associates of West Chester, Pa. “Building was actually outstripping household demand.”

But Zandi contended the housing market remains strong.

“Low mortgage rates, strong job growth and high consumer confidence all argue for continued strength in housing,” he said.

Indeed, a separate report from the Labor Department suggested jobs are being created at a robust pace.

While new claims for jobless benefits edged up by 1,000 last week to 309,000, many analysts had predicted an increase of 11,000 or more. And the widely watched four-week moving average dropped by 7,250 to 318,250, lowest since last August and well below the 340,000 range in January.

“It suggests that labor markets are tight and probably getting tighter,” Zandi said. “If one is looking for a risk to the economy, it would be tight labor markets and accelerating wages.”

Meanwhile, the Federal Home Loan Mortgage Corp. reported Thursday that mortgage rates continued to fall. Thirty-year, fixed-rate mortgages averaged 7.56 percent this week, down from 7.65 percent last week. The average was the lowest in 11 weeks.

Single-family housing starts - 80 percent of the total - shot up 10.2 percent to a 1.11 million rate, erasing an 11.3 percent loss in December.

But construction of apartments and condominiums, often volatile but not as sensitive to interest-rate changes, plunged 23.9 percent to a 242,000 rate after dropping 9.9 percent the previous month.

Regionally, starts surged 22.2 percent in the Northeast to a 165,000 rate, highest since 176,000 in November 1994. They shot up 29.8 percent in the West to 344,000.

But they fell 13.2 percent in the Midwest to a 256,000 rate, lowest since 250,000 in January 1994. They were off 6.8 percent in the South to 585,000, lowest since 564,000 in June 1995.