Construction of New Homes Surges 16.2%

Housing construction surged 16.2% last month, reversing February’s big decline for the largest increase in almost two years, and industrial production also rebounded, the government reported today.

The Commerce Department said construction of new homes climbed to an annual rate of 1.895 million units in March after an 11.8% decline in construction activity the month before.

The swings in both months occurred in apartment activity. In March, construction of apartments with five or more units jumped 53.5% after a February decline of 39.6%.

Construction of single-family homes was up 2.3% last month for an annual rate of 1.15 million units, after an even larger 5.9% increase in February.

The gains in building activity have been fueled in part by declines in mortgage interest rates. The rates peaked in July last year and then fell for seven consecutive months. While they rose slightly in early March, many analysts believe the increase was temporary and are predicting further rate declines in the months ahead.

The average rate for conventional fixed-rate mortgages stood at 13.7% in March, compared to 15.2% last July.

In another report today, the Federal Reserve Board said production at the nation’s factories, mines and utilities rose a healthy 0.3% in March, reversing a 0.2% decline in February and putting production 2.9% above the level of a year ago.