| Long term rates stay low despite short term rates { September 20 2005 } Original Source Link: (May no longer be active) http://www.washingtonpost.com/wp-dyn/content/article/2005/09/20/AR2005092000476.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2005/09/20/AR2005092000476.html
Housing starts fall, small Katrina impact
Reuters Tuesday, September 20, 2005; 8:32 AM
WASHINGTON (Reuters) - U.S. housing starts dropped by a larger-than-expected 1.3 percent in August as a 9.4 percent slide in multifamily housing construction offset a slight increase in groundbreaking on single-family homes, a Commerce Department report showed on Tuesday.
Hurricane Katrina, which hit the U.S. Gulf Coast at the end of August, had a minimal impact on the housing starts data, the Commerce Department said. It noted metro areas most affected by the hurricane accounted for about 1.1 percent of total permit authorizations in the United States in 2004, and 2.4 percent of permit activity in the South.
August housing starts slowed to a 2.009 million unit annual rate, down from July, which saw starts revised down to a 2.035 million unit pace from an originally reported 2.042 million unit pace.
Wall Street economists had expected housing starts to decrease to a 2.025 million unit annual pace in August, saying Hurricane Katrina disrupted construction late in the month.
According to the Commerce Department, 60 of the 260 jurisdictions in Louisiana, Mississippi and Alabama which reported data in July did not report in August. The department imputed data for August, but said it would not do so in September. Government statisticians will assume no permits were issued for jurisdictions that do not report permit activity in September.
Completely rebuilt homes will be counted as new housing construction after the hurricane, the Commerce Department said. That follows a redefinition of a "new housing start" after Hurricane Andrew in 1992.
Total single-family housing starts edged up 0.1 percent to a 1.709 million unit pace. But multifamily starts tumbled 9.4 percent to a 300,000 unit pace in August.
Permits for future groundbreaking, an indicator of builder confidence, were also weaker than expected, falling 2.2 percent to a 2.124 million unit pace. Economists expected permits would decline to a 2.143 million unit pace in August from a revised 2.171 million unit pace in July.
Low mortgage rates have supported the housing sector for more than four years. Even though the Federal Reserve has raised its target for short-term interest rates, long-term rates have stayed low, holding levels that remain below a year ago. Economists have predicted some slowing in the market, but home construction and sales data have yet to show much sustained easing.
Housing starts rose 13.3 percent in the U.S. West but dropped 6.6 percent in the South, 5.2 percent in the Midwest and 4.1 percent in the Northeast.
© 2005 Reuters
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