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Housing Starts Edge Up, Future Plans Drop

Housing starts improved 0.6 percent in August, to a seasonally adjusted level of 2 million units, the Commerce Department reported, recovering from earlier declines and returning to their 2004 high-water mark set in March.

But while builders were breaking ground at a robust pace, future building plans cooled and the forward-looking indicator of housing units authorized by building permits tumbled 5.5 percent to a seasonally adjusted level of 1.95 million units, down from 2.1 million during July. The August slide wipes out most of a big 6.2 percent increase recorded the month before, the Commerce Department reported. And in a sign that rising interest rates are having a chilling effect on the market, building permits now stand 0.6 percent beneath their August 2003 level of 1.96 million units.

Looking at the improving number for housing starts, Bobby Rayburn, president of the National Association of Home Builders (NAHB), commented, “Builders remain confident about the market and are keeping up with strong demand for single-family homes and condominiums. However, builders are managing their production schedules carefully and cutting back slightly on the number of new building permits.”

Single-family-house starts increased 0.4 percent, to a pace of 1.7 million units, a big jump of 11.6 percent over the August 2003 pace. But the market for multifamily housing remained soft, with starts increasing 1.5 million units to a pace of 333,000 units. Multifamily starts are now down 2.3 percent from their year-before level.

Looking ahead, David Seiders, NAHB chief economist, said, “Starts are likely to slip a bit in the fourth quarter as interest rates firm up, but it's now clear that single-family-home production will hit a new annual record in 2004.”

Builder Confidence Subsides

Reversing a strong run-up in August, builder confidence in the market for new single-family homes edged down in August, but still remained even with prior-year levels, the Washington-based National Association of Home Builders (NAHB) reported.

The latest NAHB/Wells Fargo Housing Market Index slipped three full points to a level of 68, down from 71 in August.

“This is exactly on par with the index's year-ago standing, and shows that, in the midst of a particularly devastating hurricane season, builder confidence is essentially unshaken,” said Bobby Rayburn, NAHB president.

David Seiders, the trade group's chief economist, commented, “Favorable financing conditions, sound house-price performance and reviving consumer confidence continue to propel the single-family market. Builders are still reporting healthy demand for new homes across most markets, and that bodes well for sales in coming months.”

All three components of the index fell during September, the NAHB reported. Two key components of the index fell four points, one gauging current sales conditions, and the other gauging traffic of prospective buyers. The component gauging expected sales in the next six months declined three points.

Dividends

J.C. Penney Co. Inc. declared a quarterly dividend of 12.5 cents per share on the company's common stock payable Nov. 1 to shareholders of record as of Oct. 8.

The Neiman-Marcus Group Inc. has approved a quarterly cash dividend of 13 cents per share, payable Nov. 12 to shareholders as of Oct. 29.

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