Housing construction at 20-year high

Wednesday, Jan. 21, 2004 | 11:02 a.m.

SUN WIRE REPORTS

WASHINGTON -- Residential construction activity picked up in December, helping to make all of 2003 the best year for home builders in a quarter-century and underscoring the critical role the sector played in the economy's resurgence.

The Commerce Department reported today that housing construction increased by 1.7 percent last month from November -- ending 2003 on a high note. For all of last year, the number of housing units that builders broke ground on totaled 1.85 million, up from 1.70 million in 2002.

The total for 2003 marked the strongest performance since 1978, when housing construction came to 2.02 million.

The December pace was the fastest since February 1984 and was a lot better than analysts expected. They were forecasting a nearly 6 percent drop in activity.

The housing market -- powered by low interest rates -- was one of the main forces supporting the economy last year. The sector's strength contributed to the blistering 8.2 percent growth rate in the economy in the third quarter of 2003 -- the best performance in nearly two decades.

Economists believe the housing market probably will slow a bit this year -- but still register healthy activity -- based on expectations that long-term mortgage rates probably will creep higher later this year.