February 23, 2004,
Housing starts tumble 7.9 percent
After rising to their highest level in 20 years during December, housing starts tumbled by 7.9 percent in January, the Commerce Department reported.
Even with the deep slide, January starts are still 4.1 percent above the January 2003 rate and 12 percent above the annual total of 1.8 million units for all of 2003, the highest level in 26 years.
Building permits, a sign of future housing activity, moved downward as well, slipping by 2.8 percent to a seasonally adjusted annual pace of 1.9 million units. That gave up most of the December gain, when permits rose by 4.8 percent to a seasonally adjusted rate of 1.95 million units.
Single-family starts fell 8 percent below December levels, and the rate of multi-family housing starts declined by 3.6 percent.
Home builders grow more cautious
With severe winter weather hampering business across much of the nation, the country's home builders pulled in their horns during January, and their confidence level slipped to its lowest level since last July.
The Washington-based National Association of Home Builders (NAHB) said its Housing Market Index, a gauge of builder sentiment, fell by four points to a current level of 65, down from a reading of 69 in December.
"The new-homes market is still doing well, thanks to excellent financing conditions, great buyer demographics and improving economic indicators," said Bobby Rayburn, NAHB president. "But many builders reported drop-offs in buyers visiting model homes in early February, and a large percentage attributed those declines to bad weather."
While the monthly index is adjusted for normal seasonality, unusually bad weather conditions can have an impact on the final reading, said Michael Carliner, NAHB economist.
"Also, NAHB has anticipated a slowdown from the record pace of new-home sales in the final months of 2003, and the latest Housing Market Index indicates builder expectations are consistent with that. Still, the outlook for sales conditions remains quite good heading into the spring home-buying season," he said.
Culp pre-pays debt
Culp Inc., a decorative fabrics producer headquartered in High Point, N.C., said it has made a $25 million prepayment on its $75 million of outstanding senior notes.
The notes carry an interest rate of 7.76 percent, with annual principal payments due beginning March 2006.
As part of the deal, Culp negotiated a 5 percent, or $1.25 million, premium to be paid to current note holders for the prepayment.
"As we have previously noted, one of Culp's important financial goals is to maintain a strong balance sheet," said Robert G. Culp III, chairman and CEO. "We have generated sufficient cash for operations to reduce our long-term debt by a total of $86 million, including this prepayment, over the past three and a half years. By taking this opportunity to reduce our debt on favorable terms, our long-term debt now stands at $51.1 million."
The prepayment will generate an annual cash savings of about $1.7 million in interest expense over the next two years, the company said.