
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, April 2, 1991                   TAG: 9104020086
SECTION: BUSINESS                    PAGE: A3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BUILDING OUTLAY SLOWS ITS SLIDE

Construction spending dipped 0.1 percent in February, the government said Monday, but analysts suggested the barely perceptible drop pointed to an end to 11 straight months of declining outlays.

"I think we're pretty close to the bottom and we'll be seeing the construction number starting to edge up in the coming months," said David Berson, chief economist for the Federal National Mortgage Association.

The Commerce Department said residential, non-residential and government spending fell to a seasonally adjusted annual rate of $395.1 billion, the smallest outlay since a $395.0 billion rate in April 1986.

But analysts emphasized other February statistics showing an increase in new- and existing-home sales, a jump in construction of new homes and apartments, and a rise in building permits as signs the deterioration may be ending.

Marilyn Schaja, an economist for Donaldson, Lufkin & Jenrette Securities Corp., said those data suggested the industry probably stabilized in February.

"March's data on housing will clearly be decisive in determining the strength of the industry, following the recent behavior of interest rates," she said.

The Commerce report said construction spending in February was 13.3 percent below the $455.6 billion in outlays a year earlier. Spending, which plunged 2.8 percent in January and 2.2 percent in December, has fallen every month since March 1990, when it inched up 0.4 percent to $457.3 billion.

In a separate report Monday, the National Association of Realtors said lower interest rates and prices, combined with rising incomes, boosted the ability of the typical American family to buy an existing home in February.

The Realtors' housing affordability index rose 1.8 percentage points to 114.5 points. That meant a family earning the national median income of $35,819 had 114.5 percent of the income needed to qualify for conventional financing covering 80 percent of a median-priced home costing $94,800.

The median means half the families earned more and half earned less, or that half of the homes cost more and half less.

Despite a 16.4 percent jump in housing starts in February, the value of new residential construction fell 3.7 percent, to $155.1 billion, following a 2.3 percent decline in January, the Commerce report said.

Single-family spending slipped 3.0 percent to $87.9 billion after a 5.9 percent decline a month earlier. Multifamily outlays fell 5.2 percent to $16.3 billion following a 5.5 percent drop in January.

Outlays for non-residential building edged down 0.5 percent to $95.4 billion following a 0.4 percent drop the previous month.

Only public construction posted a gain, up 6.0 percent to $109.7 billion and nearly regaining a 6.9 percent drop a month earlier. Spending on streets and highways was up 21.2 percent, rebounding from a 21.1 percent drop a month earlier.

by CNB