NEW HOUSING GIVES ECONOMY A LIFT

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

DATE: SATURDAY, January 23, 1993                   TAG: 9301230131
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
NEW HOUSING GIVES ECONOMY A LIFT
Construction of new homes increased in 1992 for the first time in six years, the government said Friday, prompting analysts to predict continued but slower growth this year.
Housing starts jumped 18.5 percent last year, to 1.2 million units, the first increase since builders boosted construction 4 percent in 1986, the Commerce Department reported.
It was the largest increase since a 60 percent advance in 1983 as the economy was emerging from the previous recession; it pushed starts to the highest level since they totaled 1.38 million in 1989.
"As we enter 1993, this feels like a pretty firm foundation for a pretty good housing year," said economist David F. Seiders of the National Association of Home Builders. "That's assuming a gradually declining unemployment rate and payroll growth."
Mark Zandi, an economist with Regional Financial Associates in West Chester, Pa., said the report augurs well for the housing industry as well as for the economy itself.
"This is one of the sectors that needs to do well to generate jobs to keep the recovery going," he said.
Daryl Delano, a housing specialist at Cahners Economics Newton, Mass., also was encouraged by a 7 percent increase in applications for building permits, often a barometer of future activity.
Applications totaled 1.21 million at a seasonally adjusted annual rate in December. For the year, permits jumped 16.5 percent, to 1.11 million.
Still, most analysts said housing growth this year would be just half of that in 1992, which itself was far less robust than during previous recoveries.
David Berson, an economist with the Federal National Mortgage Association, said housing starts advanced 42 percent in 1971, 42 percent in 1976 and 60 percent in 1983.
Construction of new homes and apartments had plunged in 1991 to 1.01 million units, the lowest level since 326,000 in 1945 as World War II was ending.
Most analysts attributed the rebound last year to mortgage rates that fell to their lowest level in two decades. The price of a home loan dropped from 9.03 percent in March to 7.84 percent in September and still averaged 8 percent during the week ended Friday.
Single-family starts rose 22.6 percent in 1992, to 1.03 million units, while multifamily starts fell 1.3 percent, to 171,300 units.
In December, single-family starts jumped 3.7 percent, to a 1.13 million annual rate, the highest since the 1.33 million rate in February 1990. Apartment construction moved up 1.9 percent, to a 172,000 rate.

by Bhavesh Jinadra by CNB