Housing Starts Fall; Building Permits Reach 2 1/2-Year Low

Housing starts nationwide slowed 2.9% in April while contractors took out the smallest number of building permits in 2 1/2 years, the Commerce Department said today.

Contractors started work on homes at a seasonally adjusted annual rate of 1.699 million, down from March’s revised estimate of 1.749 million, the government said. April’s 2.9% drop followed a 4.8% falloff in March.

Economists had expected some of the two-month decrease, saying unusually good winter weather allowed contractors to start more construction than usual at the start of the year.

Analysts said the sharp rise in mortgage rates that started in mid-April also contributed to the slump.

Authorities nationwide gave out permits last month at a seasonally adjusted annual rate of 1.6 million, 7% below March’s revised estimate of 1.72 million and the lowest rate since October, 1984.