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

DATE: WEDNESDAY, September 20, 1995                   TAG: 9509200024
SECTION: BUSINESS                    PAGE: B-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

HOUSING STARTS UP 0.6% FOR FIFTH STRAIGHT INCREASE

Housing starts rose 0.6 percent in August, the fifth consecutive advance, boosting construction to the highest level in eight months.

Many analysts had expected little change. They contended that after bouncing back from last winter's slump, starts and sales would plateau near their current level.

Sales advanced in every region except the South, which had a double-digit gain a month earlier. Analysts had said the big increase could not be sustained.

The Commerce Department said Tuesday that housing starts totaled 1.398 million at a seasonally adjusted annual rate, up from a revised 1.390 million in July but down from 1.46 million a year earlier. The July total originally was estimated to have been 1.38 million.

The August level was the highest since a 1.545 million rate last December, when many analysts believe the current housing cycle peaked.

After December, the housing industry began to slow as mortgage rates jumped above 9 percent. But rates began dropping as the year progressed and averaged 7.85 percent in August.

While that was above the 7.61 percent in July and 7.53 percent in June, it was well below the 9.15 percent last January and represented a sizeable saving for new homeowners.

The monthly payment on a $100,000 mortgage with a 7.5 percent interest rate is $699, while the payment on the same loan with a 9 percent rate is $805 - a difference of $106.

The drop below 8 percent was reflected in three straight monthly gains in sales of both new and existing homes through July. But many analysts expect sales to level off for the remainder of the year.

Single-family starts, 80 percent of housing construction, rose 1.4 percent to a 1.11 million rate, slower than the 6.2 percent advance in July. Still, it was the third gain in a row.

Construction of new apartments and condominiums fell 2.4 percent to a 285,000 rate. This volatile sector had risen 10.6 percent in July after plunging 10.2 percent in June.

Regionally, starts shot up 9.2 percent in the Midwest to a 308,000 annual rate. They were up 1.7 percent in the Northeast to 117,000, and 0.3 percent in the West to 329,000.

But they fell 3.2 percent in the South to a 644,000 rate, after jumping 16.7 percent a month earlier.

by CNB