ROANOKE TIMES 

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 20, 1991                   TAG: 9103200029
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

HOUSING STARTS LEAP 16%

The housing industry showed its first sign of life in three months in February with a 16.4 percent jump in new construction that analysts said might signal the beginning of a modest recovery.

The Commerce Department reported Tuesday that new homes and apartments were started at a seasonally adjusted annual rate of 989,000, up sharply from a 850,000 rate in January and the largest increase since a 21.8 percent gain in January 1990. It also was the first increase since November.

"This isn't a flash in a pan," said Cynthia Latta, an economist with DRI-McGraw-Hill in Lexington, Mass. "The conditions are right for a rebound." The housing industry traditionally is a leading economic indicator and gains often are taken as early signs of general recovery.

Analysts attributed the February rebound to low interest rates, weak housing prices and renewed consumer confidence accompanying allied victories in the Persian Gulf War. Some said favorable weather was a factor, too.

The report suggested continued improvement, saying that applications for building permits, generally a barometer of future activity, rose 8.5 percent to 865,000. It was the first increase in eight months and the biggest since a 22.8 percent advance in January 1990.

A Federal Reserve survey earlier this month showed eight of its 12 districts reported "an increase in buyer interest and, in some areas, purchases," as well as cautious optimism among builders.

Despite the rebound, the number of starts in February was down 32.2 percent from the same month last year. For the first two months of 1991, they were 39.7 percent below the same period of 1990.

The Commerce report said starts of single-family houses accounted for most of the February increase. They were up 18.3 percent to a 771,000 annual rate, wiping out a 13.2 percent drop a month earlier.

Multifamily construction starts also gained, up 10.1 percent to a 218,000 rate that erased a 10 percent decline in January. Starts on apartment buildings containing five or more units fell 0.6 percent, however. 


 by CNB