Housing Starts Rise Unexpectedly

The Commerce Department said Wednesday that construction of new homes in the United States rose 1.7% in September, catching some analysts by surprise.

Increased construction likely means more business for flatbed trucking companies that haul building materials. Also, in the case of home construction, dry van freight can see an increase in demand for the delivery of household appliances and furniture.

Many analysts were expecting housing starts to fall by around 2% on the belief that builders would hold off on new projects, given new economic uncertainties created by the Sept. 11 attacks, the Associated Press said.

Bloomberg reported that the rise could be explained by the likelihood that builders are still catching up on back orders. The increase set housing starts at an annual rate of 1.574 million homes.

The National Association of Home Builders, in a survey released Tuesday, said the attacks were cutting into the demand for new homes, despite lower interest rates. Builders said they were a lot less optimistic about sales for October and for the next six months.

y region, housing starts jumped by 12.5% in the West to a rate of 423,000, and 7.6% in the South. In the Midwest, starts plunged by 16.6% to a rate of 282,00 and in the Northeast, they declined by 11%.

Although the housing sector has remained strong despite the deteriorating economy, there are signs it could slow in the months ahead. Mortgage applications for home purchases remain down about 8% from last year and the rate of housing permits being issued, an indicator of builder confidence, fell 3% in September.