CONSTRUCTION: High Building

U.S. building, which has been setting record after record, last week reached a new high. So reported the Departments of Labor and Commerce. Total new construction reached $4.2 billion for April, up 13% over last year for the first four months. Private construction, up nearly $400 million over last year to $2.9 billion in April, also reached a new record of $10.7 billion in the first four months, largely helped by a 29% rise in home building over last year. Federal Housing Commissioner Julian Zimmerman predicted 1,284,000 new housing starts in 1959 v. 1,201,000 in 1958, but private builders were more optimistic. The National Association of Home Builders estimates “conservatively” that the industry will strike a 1,300,000-start year.

The rise in housing construction has a built-in problem. The pressure for mortgage money usually tightens the money market. So far this year, mortgage money has not had to compete seriously in the money market because business has kept its capital expansion low. But as home building picks up and improved business sends more firms to the money market, tighter money could take the bloom off the housing boom. Fortnight ago, the Federal National Mortgage Association reported that it purchased more mortgages in the first quarter of this year than ever before, indicating that banks and other lending institutions are beginning to have trouble finding takers for their mortgages.

But there are signs that the housing tide has not reached its peak. The number of mortgage-insurance applications to the FHA is so great that the agency has had to revise its estimate for the current fiscal year from 962,500 to “well over one million” unit applications.