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Dodge Report Shows Drop in Housing Starts

May 25, 1987

NEW YORK (AP) _ Residential building, hobbled by a continued decline in apartment construction, slipped 3 percent in the first quarter of 1987, a national construction information group said Monday.

Although single-family building remained steady during the period, multi- family construction continued the retreat precipitated by tax reform, said F.W. Dodge, a division of McGraw-Hill Information Systems Co.

″Strong demand for single-family homes supported a generally high level of total housing starts through 1987′s first quarter, even though the rental building market softened,″ said George A. Christie, F.W. Dodge’s chief economist.

Tax reform legislation, which began to take effect this year, abolished many of the tax shelters once available to builders of multi-family, rental units. Removal of those loopholes has led to a drastic decline in apartment construction, Christie said.

Christie also warned that the recent surge in mortgage rates could cut this year’s production of owner-occupied housing by as many as 100,000 units.

″With apartment building already inhibited by tax reform, April’s surge of fixed-rate mortgages back into the 10 to 11 percent range requires a lowering of our total housing start forecast for 1987 to 1.65 million units, a decline of nearly 10 percent from last year,″ Christie said in a press release.

The outlook follows a government report earlier this month that showed housing construction off 2.9 percent in April. The Commerce Department’s monthly report also cited a dropoff in apartment building as the main reason for the decline.

F.W. Dodge said the Los Angeles-Long Beach metropolitan area and Washington, D.C., led the nation in total housing starts during the first three months of the year.

But Los Angeles, with 13,171 units, was off 6 percent from a year ago, F.W. Dodge said.

Residential building in the nation’s capital totaled 11,398 units, an increase of 9 percent.

The rest of the nation’s top 10 housing areas in the first quarter were:

-Atlanta, 11,203 units, down 21 percent from the same period a year ago.

-Riverside-San Bernardino, 10,971 units, down 4 percent.

-San Diego, 7,810 units, up 12 percent.

-Phoenix, 7,202 units, down 56 percent.

-Detroit, 6,730 units, up 42 percent.

-Tampa-St. Petersburg, 6,684 units, down 36 percent.

-Chicago, 6,537 units, up 23 percent.

-West Palm Beach-Boca Raton, 5,622 units, up 14 percent.

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