Housing starts off

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Tuesday, March 16, 2004 | 9:24 a.m.

WASHINGTON -- U.S. housing starts fell in February to the slowest pace since August as rain slowed construction in the South. At last month's rate, more homes still would be built in 2004 than in any year since 1978.

Home construction dropped 4 percent to a 1.855 million annual pace, the Commerce Department said today in Washington. The fifth-wettest February on record contributed to a 1.6 percent drop in the South, which has about half of all home starts.

Demand for housing is forecast to make 2004 the best ever for sales, aided by low mortgage rates, according to Fannie Mae, the largest U.S. mortgage financier.

The fixed rate on a 30-year mortgage averaged 5.64 percent in February, less than a year earlier, and has since dropped to 5.41 percent, according to Freddie Mac.

Federal Reserve policy makers are expected to keep their benchmark interest rate at the lowest since 1958 today, based on a Bloomberg News survey of economists.