Feb. Housing Starts Highest in a Decade

Construction of new homes and apartments, propelled by low mortgage rates and good weather, jumped 6% in February to the highest level in more than a decade, the government said Tuesday. But the nation’s industrial production failed to show an increase for the first time since late 1996.

The Commerce Department reported that construction of new single-family homes and apartments rose to a seasonally adjusted annual rate of 1.64 million units as home builders responded to the lowest mortgage rates in four years.

But in the West, where El Nino has spawned torrential rains and flooding, housing construction fell 7.9% to an annual rate of 348,000 units. It was the biggest one-month setback since a 19.1% plunge in December 1996.

All other regions joined in the February construction boom.

The nation’s manufacturers did not fare so well. Output at U.S. factories, mines and utilities was steady in February, the first time since October 1996 that there has been no monthly gain, the Federal Reserve Board said.

The unchanged February performance for industrial production, which followed a small 0.1% increase in January, was attributed in part to the third straight monthly decline in the assembly of cars and light trucks.

Manufacturing is expected to bear the brunt of the Asian currency crisis. Economists say U.S. exports to the region will decline and that Asian imports to the United States will rise because the falling Asian currencies make those countries’ products cheaper.

The Asian crisis is expected to shave as much as a percentage point off U.S. growth this year, but so far the troubles have provided more of a boost than a drag to the economy. Interest rates are falling as investors rush to the safety of U.S. investments, helping push 30-year mortgage rates to a four-year low in January.

The housing market also been helped by an unseasonably mild winter in many parts of the country, courtesy of El Nino.

The 6% increase in housing construction in February followed a 0.2% rise in January. The 1.64-million annual rate for construction was the highest since housing starts climbed to 1.66 million units in November 1987.

The housing report shows that construction on single-family homes rose 4.3% in February to an annual rate of 1.27 million units, the highest level for this category since March 1994.

Construction of multifamily units was up 12.6% to an annual rate of 366,000 units.

Building permits for future construction increased 6.5% in February, the biggest gain since a 7.7% rise in December 1993.