Friday, October 9, 1998, Vol. 112, No. 184

By LAURIE JOHNSON Housing starts rise in third quarter 98 By LAURIE JOHNSON The Daily News Housing starts were up in Shelby County in the third quarter compared to the same period a year ago primarily due to dry weather and low interest rates, according to local home builders. Third quarter home starts totaled 641, up from 595 reported for the same period in 1997, according to the Shelby County Construction Code Enforcement Office. The year-to-date figures showed gains over the same period in 1997, up from 857 to 888. "The third quarter was an excellent quarter for our company," said Charles Morgan, president of Vintage Homes, whose company started 70 homes in July, August and September. "Were going at a record breaking pace. We closed as many homes by the end of the quarter this year as we closed during all four quarters of last year." While the Grays Creek Sewer moratorium thwarted some new development and construction during third quarter 1997, lower interest rates and extremely dry weather have boosted home building in 1998. Interest rates are about a full percentage point lower now than they were this time last year, and this summers drier weather allowed more lots to be developed and more homes to be built. A particularly cold and rainy winter delayed land development several months, resulting in lots becoming available later than the norm. "Because of the dry weather, all the stuff that was so wet back in the spring was able to come out of the ground, and builders were able to get a good number of houses up for the buying public for the third quarter," Morgan said. At Hyneman Homes, several subdivisions were also completed during the third quarter. "At our company, we were waiting on several subdivisions to be completed, and they were completed in the last of the second quarter and the first of the third quarter, so our home starts increased dramatically during the third quarter," said Kevin Hyneman of Hyneman Homes. Hyneman said he believes low unemployment, in addition to low interest rates and more available lots, contributed to the increase in starts and housing sales. Conditions were similar for Chamberlain & McCreery. "Last winter was really tough, so rather than lots coming in in April, May and June, they were coming in in June, July and August," said Jon McCreery of Chamberlain & McCreery. "I had a subdivision that was due to be delivered in February that I didnt get underway until June, and it was because of that weather," he said. "Im sure that kind of thing happened to everybody, so you had a backlog of lots that came online at the same time, and thats probably translated into more permit pulls." However, James Reid, vice president of Reid Homes, said while interest rates were lower, this did not seem to exactly translate into a mad rush of buyers. "The interest rates have been low for several years now, and even though they are now a little bit lower, there has not been the rush to go out and buy like it was when they were at 12 percent and then dropped to 10 or 9 percent. "Everybody just came out of the woodwork then," he said. "Now, dropping from 7 or 7.5 to 6.5 to 6.75 just doesnt seem to be quite as exciting." Reid said home sales at his company were somewhat slower this year than they were at the same time last year. "It hasnt been bad. It just hasnt been as good as you would think it would be, with interest rates as low as they are," he said. Morgan said while construction activity was up in the third quarter, he is concerned about the effect the constant barrage of negative information about a possible global recession would have on future home sales. "The bright spot for the fourth quarter is that we are going to continue to see low interest rates, and if the weather holds true, we are going to see a large availability of housing because of lot availability," he said. "The fourth quarter has every potential to be as good if not better than the third, if we just dont continue to beat ourselves to death as a country about these global recession issues, the stock market and the Presidents situation." On a national level, housing starts decreased slightly at the end of the summer, down 5.5 percent in August from the previous month, according to the U.S. Commerce Departments latest report. he drop almost completely offsets a 5.3 percent increased registered in July and leaves housing starts at a strong rate of 1.61 million units on a seasonally adjusted, annualized basis. "August housing starts were in line with findings from our latest surveys of builders, which indicate theres still strong demand for new homes and that the market has stabilized at a healthy level," said National Association of Home Builders executive vice president Kent Colton. "A few builders have expressed concerns about the global crisis and the stock markets recent volatility, but overall the U.S. housing market remains in quite good shape, largely because of the very low levels of interest rates generated by massive inflows of capital from abroad." Colton said NAHB projections indicate 1.6 million units are expected to be completed in 1998. "That would make 1998 the best year for home building since 1987, and on the single family side, it would be the best year since 1978."