HOUSING DATA HINT AT RECOVERY JULY CONSTRUCTION REACHES HIGHEST LEVEL SINCE 1986.

Byline: Gregory J. Wilcox Staff Writer

In a sign that the economy may be gaining steam, housing construction reached a 17-year high nationwide during July although it fell 13.9 percent in the West, the government said Tuesday.

Construction of single-family homes and apartments increased 1.5 percent from June, a strong month in its own rite, amid rising interest rates to an annualized 1.87 million units, the Commerce Department said. That's the highest level since April 1986.

It was a different story in the West, albeit not an entirely bad one.

Home and apartment construction fell nearly 14 percent from June to an annualized rate of 434,000 units. But it is up 12 percent from a year ago, the department said.

``These (numbers) tend to fluctuate from month to month so it really takes a few months to establish a real trend. It's down from last month (June), but last month's number was one of the highest ever,'' said department spokeswoman Erica Filipek.

In June housing starts in the West totaled an annualized 504,000 units, 418,000 of them single-family homes. It's the third-highest total since the department began tracking the market in 1984.

The department does not break down statistics for individual states.

But California is on track to have its best year for home building since 1989.

The Burbank-based Construction Industry Research Board predicts that 180,000 new homes and apartments will begin construction this year, which would be the highest number in 14 years.

Still, it is not enough to meet demand.

The market remains strong even though interest rates have been steadily rising since hitting a 40-year low of 5.21 percent the last week in June. By last week they had reached 6.24 percent, according to Freddie Mac's survey.

This robust construction is one of several suggestions that the long- awaited economic recovery may be under way.

Back-to-school sales are running ahead of last year's figures, and inventories are being brought down which means production will pick up.

``You do see signs that the economic recovery is starting to take shape,'' said Jack Kyser, chief economist at the nonprofit Los Angeles County Economic Development Department.

This has been an unusual recovery, though. Past downturns saw the housing and automobile sectors backslide. But that didn't happen this time.

And that's why this recovery seems to lack pop, Kyser said.

Housing starts jumped 19 percent in the Northeast to an annual rate of 194,000 units; they increased 5.7 percent in the Midwest to an annual rate of 372,000 units; and increased 5.6 percent in the South to a rate of 872,000 units.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com

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SOURCE: Department of Commerce

Associated Press