Housing Construction Off 5.2% to Lowest Since 1982

Housing construction fell 5.2% in September to the lowest level of activity since the 1982 recession, the government reported today.

The Commerce Department said new homes and apartments were being built at a seasonally adjusted annual rate of 1.26 million units last month, after an even larger 6.2% drop in activity in August.

Analysts blamed rising mortgage rates for the back-to-back declines, with some warning that unless the Federal Reserve comes to the economy’s rescue with lower rates, the country could topple into a recession.

Mortgage rates, which climbed as high as 10.22% in early September, have been falling slightly in recent weeks and now stand at 9.95%, according to the national survey by the Federal Home Loan Mortgage Corp.

The 1.26-million-unit pace was the most sluggish annual rate since new homes and apartments were being built at an annual rate of 1.17 million units in October, 1982, during the depths of the 1981-82 recession.

For the year, construction has fallen in six months and risen in only three months. The level of activity for the first nine months of 1989 is running 6.2% below last year.

For September, construction of single-family homes fell 2.1% to an annual rate of 971,000 units, the second consecutive month that single-family homes have been below the 1-million mark.

Construction of multifamily units was down an even sharper 14.1% to an annual rate of 292,000 units. The main sector in apartment construction, complexes with five or more units, fell to their lowest level since June, 1982.

In a disturbing sign for the future, permits for new units also dropped in September, falling 2.4% to 1.30 million units.

The weakness last month was concentrated in the South and West. Construction activity in the South plunged 15.6%. Housing starts fell 3.4% in the West. However, construction in the Northeast rose a sharp 17.2% and it was up 2.9% in the Midwest.