August Housing Starts Up 6.2% --Biggest Increase in 5 Months

In another indication that the economy may be picking up, housing starts in August rose a hefty 6.2%, the biggest increase in five months, the government reported today.

Construction of new homes and apartments rose to a seasonally adjusted annual rate of 1.75 million units last month, the Commerce Department said.

It was the strongest rise since a 14.7% increase in March, and followed a 3.2% July decline.

The increase was propelled by a sizable 12.4% jump in construction of apartments.

Construction of single-family homes, by contrast, rose a slight 1% to an annual rate of 1.07 million units.

Apartment activity has been quite volatile in recent months. The big August gain came after a 12.1% June decline, leaving construction of apartments with five or more units still slightly below the June level.

Construction of apartments with two to four units rose an even sharper 36.4% in August after falling 16.3% in July.

The overall advance was certain to cheer analysts, who have been puzzled about the previous failure of declining interest rates to spur much of a rebound in building activity.

The August advance in housing construction was widespread, with three out of four regions of the country showing good gains.

The biggest advance was in the West, which posted a 16.8% increase. Housing construction was up 15.9% in the Northeast and 12.4% in the Midwest.

The only region suffering a decline was the South, where building activity dropped 4.1% in August after rising 6.1% in July.

In a good sign for future activity, the issuance of building permits rose 3.5% in August after a 1.1% July decline.