Housing Starts Climb to Almost 21-Year High
Housing starts increased to a seasonally adjusted annual rate of 2.159 million units in January from an upwardly revised 2.063 million unit pace a month earlier, the government said. The January total marked the highest pace of housing starts since February 1984 when they hit a 2.260 million unit pace.
Wall Street economists had expected housing starts to decrease 4.3 percent to a 1.917 million unit rate from the 2.004 million unit rate initially reported for December.
Low mortgage rates have been supporting the housing sector despite short-term interest rate increases by the U.S. Federal Reserve. Rates on 30-year mortgages averaged 5.57 percent in the week ended Feb. 10, and 5.8 percent for all of 2004, according to mortgage funder Freddie Mac.
In fact, interest rates on 30-year fixed-rate mortgages have not risen above 6 percent in at least six months, helping to keep the housing market hot, said Freddie Mac's chief economist. Freddie expects long-term mortgage rates to average about 6 percent for the full year while the National Association of Realtors has pegged long-term rates at 6.7 percent by the end of 2005.
Single-family housing starts rose 2.7 percent to a record 1.760 million unit pace from December's 1.713 million unit rate.
Permits for future groundbreaking, an indicator of builder confidence, rose 1.7 percent to a 2.105 million unit pace in January from an upwardly revised 2.069 million unit pace the previous month. Analysts had expected permits to decrease to a 1.995 million unit pace.