Home Construction Rate High 3rd Straight Month

Declining interest rates in March kept housing construction high for the third straight month and compelled many businesses to revise slightly upward their capital spending for this year, the government said today.

The Commerce Department said new homes and apartments were built at a seasonally adjusted annual rate of 1.95 million units last month. Although 2.4% lower than the February rate, it was the third consecutive month that starts have exceeded the 1.9 million annual level, not seen since 1978.

The department also said a survey of U.S. businesses completed in March showed they will increase spending for expansion and modernization by 0.9% this year to $383.01 billion.

That is the smallest increase since 1983. But it represents an upward revision from a fall survey that found businesses expecting to cut spending by 1% this year.

Many analysts believe that recent sharp declines in interest rates will persuade businesses to further intensify building plans. But others note that the oil industry, an important sector of the economy, has been drastically reducing capital spending because of the world’s oversupply of oil.