Housing Starts Post Best Gain in Five Months

Housing construction in August posted its best gain in five months, a 6.2% increase that analysts said Wednesday provided further evidence that the economy is finally showing signs of a revival.

The Commerce Department said construction of new homes and apartments rose to a seasonally adjusted annual rate of 1.75 million units in August, reversing July’s 3.2% decline. It was the biggest increase in housing activity since a 14.7% advance in March.

The report on housing was the latest in a series of bright August economic statistics. The government has already reported that unemployment declined for the first time in six months, while industrial production and retail sales showed healthy gains last month.

All of these statistics have been cited by the Reagan Administration as proof that the economy is rebounding after a yearlong slump. Strength in housing construction is a key underpinning for Administration hopes of a fivefold increase in economic growth in the second half of the year.

Commerce Secretary Malcolm Baldrige said the new report showed not only a rise in actual construction but a gain in building permits, a good barometer of future activity.

“With moderate house-price increases and the lowest mortgage rates in over five years, I expect further moderate gains in building activity,” he said in a statement.