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

DATE: WEDNESDAY, April 17, 1991                   TAG: 9104170111
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

HOME-BUILDING SLIPPED IN MARCH/ ANALYSTS OPTIMISTIC MILD RECOVERY AHEAD

Housing starts fell 9.3 percent in March, the government reported Tuesday, but analysts said a second straight increase in building permit applications signaled a mild recovery ahead for the nation's construction industry.

A separate government report said industrial production dropped 0.3 percent in March, the sixth decline in a row and an indication that America's factories remained mired in recession.

Economist Evalina Tainer of the First National Bank of Chicago said the Commerce Department statistics on housing suggested the industry had reached its low point in January. But, she added, "it's hard to make that same case for industrial production."

The Federal Reserve said the drop in manufacturing output was broad based and resulted in a 9.25 percent first-quarter plunge at an annual rate following a 7 percent rate of decline in the final three months of 1990.

The nation's factories, mines and utilities operated at 78.7 percent of capacity in March, down 0.4 percentage point from the previous month and the lowest rate since the 78.6 percent of September 1986, the Federal Reserve said.

In its separate report, the Commerce Department said construction of new homes and apartments, which had soared 17.2 percent in February, dropped in March to a seasonally adjusted annual rate of 901,000.

Housing starts had risen to a rate of 993,000 in February from January's 847,000, which was the lowest in nine years.

Applications for building permits, often a barometer of future construction activity, rose 2.4 percent to an 884,000 annual rate in March after an 8.3 percent gain a month earlier.

"It suggests that builders believe the market for their product is improving," said Richard Peach, an economist with the Mortgage Bankers Association.

Chief economist David Seiders of the National Association of Home Builders concurred, saying "we think a gradual upswing is in the offing."

Construction of new single-family houses slipped 5.9 percent in March to a 732,000 rate after jumping 20.1 percent a month earlier. The single-family sector represents about 75 percent of the housing industry.

Multifamily housing starts were down 21.4 percent to a 169,000 rate, more than wiping out an 8 percent February gain. The decline included an 18.5 percent plunge in construction of buildings with five or more units, to a 141,000 rate. That was the lowest since the department began keeping such records in 1963. The previous low had been 157,000 units in June 1975.

Total starts for all types of housing in the first three months of the year were 36.8 percent below the same period of 1990.

by CNB