Washington, DC, Feb. 19--Construction of new homes and apartments rose in January to the highest level in 16 years as low mortgage rates continued to power a housing boom, according to the Commerce Department.
Work was started on 1.850 million units at a seasonally adjusted annual rate in January, up 0.2% from 1.847 million units in December.
The gain was due mainly to the fact that mortgage rates remained at enticing levels in January. Freddie Mac reported that the nationwide average for 30 year mortgages stood at 5.86% last week, only a little higher than the 40 year low of 5.85% set in the first week of January.
For January, the government said that construction was begun on 1.51 million single family homes, a gain of 2.1% from the December level of 1.48 million units.
Strength in this area offset a drop in construction of apartments, which fell by 8.7% to an annual rate of 303,000 units.
For all of 2002, housing starts totaled 1.71 million units, up 6.4% from 1.60 million units started the year before. Last year marked the best year for housing construction since 1986.
Economists are looking for another strong year for housing in 2003 as mortgage rates are expected to stay at low levels for months to come. The Federal Reserve continues to pursue an easy credit policy in an effort to bolster what so far has been a weak and jobless recovery.
By region, housing starts posted the biggest gain in the West in January, an increase of 9.9% to an annual rate of 522,000 units. Housing construction was also up in the South, rising 3.8% to an annual rate of 839,000 units in January.
The other two regions of the country suffered declines in housing starts in January. The biggest drop was in the Northeast, where housing starts fell by 16.7% to an annual rate of 135,000 units, a decrease that was attributed in part to bad weather conditions.
