Record Cold Slows Housing Starts, Off 8%

Housing starts, slowed by record cold weather over much of the nation last month, declined 8% in December and ended the year at the lowest level since the recession year of 1982, the government reported today.

The Commerce Department said the December decline helped slow construction of new homes and apartments to 1.37 million units in 1989, compared to 1.49 million units the previous year, a 7.6% drop.

The 1.37 million starts last year were the lowest since 1982 when 1.06 million units were built. Both the Federal National Mortgage Assn. and the National Assn. of Home Builders are forecasting about 1.37 million starts in 1990.

Before the abnormally cold weather hit last month, the housing industry had been held back through much of this year by high interest rates, which have moderated recently.

Starts dropped from a high of 1.68 million units last January to 1.26 million units in September before rebounding to 1.43 million units in October. Starts fell again in November, to 1.34 million units, pulled down by a 15.3% decline in multifamily projects.

Fixed-rate mortgages averaged 9.78% at the end of December after peaking at over 11% last March.

Construction of single-family homes in December fell 10% to an annual rate of 904,000 units after falling 2% in November. That was the lowest since 862,000 units were started in December, 1982.

Apartment construction declined 2.4% to an annual rate of 331,000 units, compared to a 15.3% decline in November.

The Northeast posted the steepest decline, down 23.3%. That was followed by a 10% drop in the South and a 9.8% decline in the Midwest. Starts rose only in the West, where they gained 3.4%.