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

DATE: FRIDAY, October 20, 1995                   TAG: 9510200042
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Bloomberg Business News
DATELINE: WASHINGTON                                LENGTH: Medium

HOUSING STARTS FALL ONCE AGAIN

New housing construction slowed for the second month in a row in September, and claims for unemployment insurance climbed to the highest level since mid-September, signs that the U.S. economy may be weakening.

Those findings in government reports Thursday suggest ``we're still on course for slow growth,'' said Cynthia Latta, an economist at DRI/McGraw-Hill in Lexington, Mass.

The slowdown in home construction was centered in Midwestern and Southern states. That contributed to an unexpected 0.1 percent decline in September starts to an annual rate of 1.390 million, according to Commerce Department figures. Economists had been anticipating an 0.3 percent increase.

Moreover, the Commerce Department revised the August number to a 2.8 percent decline - not the 0.6 percent increase it had estimated a month ago.

``We had a huge bounce earlier in the summer'' in housing construction, said Latta. ``Now things are leveling off to a more sustained level.'' The decline should continue into next year, said Joe Blalock, an economist at America's Community Bankers, a Washington-based trade group.

Underscoring the weakness, a gauge of future homebuilding suggested demand is tapering off. Fewer consumers applied for home mortgages last week, the Mortgage Bankers Association of America's index of mortgage applications showed.

One reason could be concerns about job prospects. A report from the Labor Department showed the number of U.S. workers applying for state unemployment benefits rose unexpectedly last week.

New jobless insurance claims increased 5,000 - not the decline analysts were expecting - to a seasonally adjusted 361,000. That was the highest since Sept. 16, when states reported 366,000 new claims. In the week before last, claims rose by 13,000, originally reported as a rise of 6,000.

Even with last week's unexpected rise, The four-week average for jobless claims - a less volatile gauge of labor markets - fell to 348,750 from 350,000 the previous weekThe average is at its lowest since Sept. 2, when it was 344,000.

The message from the housing report, analysts said, is that while mortgage rates have declined in recent weeks, builders are being cautious about starting new projects because of concerns that the economy may slow further.

Single-family housing construction dropped 0.8 percent last month, while multifamily projects increased 2.6 percent.

by CNB