Home Building Down 7% After Big Gain in Jan.

A decline in apartment construction caused housing starts to plunge by 7% in February after a 24.7% leap during January’s warm spell, the Commerce Department said today.

New housing permits in February were also down, falling by a record 25% to an annual rate of 1.3 million, compared to 1.7 million in January. The sharp drop surpassed a 20% decline in January, 1979.

Permits for new apartment buildings of five or more units also set a record decline, plunging by 59.8% in February to 262,000 versus January’s 652,000--the most severe drop since 46% in January, 1975, the department said.

“This report has to be looked at in the context of what happened in January,” said Thomas Holloway, senior economist at the Mortgage Bankers Assn. of America.

In addition to the warm weather, a change in housing laws led to the increase in apartment building, Holloway said. There was also “a rise in interest rates, a very sharp rise from January to February, and that’s going to discourage activity in the months ahead,” he said.

David Seiders, chief economist for the National Assn. of Homebuilders, predicted new home construction “will fall off in March” and remain down for the remainder of 1990.

January’s increase was revised down to 24.7% from 29.6%, making it the biggest monthly increase since July, 1982, a Commerce Department spokesman said.

The annual rate of new housing construction in the United States stood at 1.5 million in February compared to 1.6 million in January, about the same as February, 1989.

Construction of single-family dwellings was up by 5.1% in February at an annual rate of 1.2 million, compared to 1.1 million in January, the department’s Census Bureau said in its monthly report.

Despite that advance, William Kelleher, an analyst at the U.S. Chamber of Commerce, warned there is “home buyer resistance to continuing high prices and high mortgage interest rates.”