Housing construction posts gain in June
WASHINGTON (AP) – Housing construction in June climbed to the highest level since the beginning of the year and fewer American workers filed claims for unemployment benefits, more hopeful signs that the economy may be gaining traction. The Commerce Department reported Thursday that the number of housing projects builders broke ground on rose 3.7 percent in June from May to a seasonally adjusted annual rate of 1.80 million units, the strongest showing since January.
The increase came despite wet weather in some parts of the country and followed a sizable 6.8 percent advance registered in May.
“Low mortgage rates, which although having ticked up recently remain at historically low levels, are the primary driver of the booming housing market,” said Matthew Ellis, an economist at Wachovia.
In another report, the Labor Department said that for the work week ending July 12, new applications for jobless benefits dropped by a seasonally adjusted 29,000 to 412,000, a three-week low.
Although economists said that the weekly figure could be distorted by temporary plant closings that occur around this time each year, they felt heartened by a solid drop in the more stable, four-week moving average of claims, which smoothes out weekly fluctuations.
The moving average fell by 3,500 last week to 424,000, the lowest level in three months.
Although jobless claims remain above 400,000, a level associated with a sluggish jobs market, the declines offered hope that the pace of layoffs may be stabilizing, economists said.
The number of workers collecting unemployment benefits for more than a week plunged by 117,000 to 3.65 million for the work week ending July 5, the most recent period for which that information is available – and the lowest level since late April.
“The rate of job loss is abating,” said Mark Zandi, chief economist at Economy.com. But for jobseekers “the market is still very difficult,” he said.
The reports came as a group of academic economists declared the 2001 recession officially over. The National Bureau of Economic Research, the recognized arbiter of when recessions begin and end in the United States, said the recession ended in November 2001, only eight months after it began.
Still, unemployment remains high, and Democrats say President Bush is mishandling the economy.
Federal Reserve Chairman Alan Greenspan, in appearances on Capitol Hill this week, said the central bank will keep short-term interest rates low in the months ahead and possibly cut them in an effort to get the economy back to full throttle. Greenspan and private economists are hopeful that economic growth, which has been pokey so far this year, will pick up speed in the second half of the year.
In the housing construction report, the number of single-family homes that builders began in June rose by 5.3 percent from May to an annual rate of 1.46 million units. However, the number of apartments, condos and other multifamily housing projects dropped by 4.3 percent in June to a rate of 312,000.
Home builders are bullish about sales prospects even as mortgage rates creep up – the average rate on a 30-year fixed rate mortgage rose this week to 5.67 percent, the highest level since the beginning of May, mortgage giant Freddie Mac reported. Nevertheless, this week’s rate is down from the same week last year, when 30-year mortgages averaged 6.49 percent.
By region, housing construction in the Northeast rose to a rate of 156,000 in June, a 9.9 percent jump from May’s level. In the West, builders broke ground on housing units at a rate of 486,000, an 8 percent increase. Housing starts in the South rose 2.3 percent to a rate of 803,000. But housing construction in the Midwest decreased 0.8 percent to a pace of 358,000.
Housing permits, a good sign of current demand, rose 0.8 percent in June from May to a rate of 1.82 million units. Permits for single-family homes increased 5.3 percent to a rate of 1.42 million, a record monthly level.
“Statistic by statistic tends to be coming in somewhat better than we expect,” Greenspan said Wednesday. “That’s usually a sign that these things are changing.”
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On the Net:
Housing: http://www.commerce.gov/
Jobless claims: http://www.dol.gov/