Single-family housing starts rose 2.6% in September, as construction activity remained strong despite the devastation caused by Hurricane Katrina in Louisiana, Mississippi, and Alabama.The U.S. Census Bureau reported that single-family starts increased from a seasonally adjusted annual rate of 1.70 million in July to a 1.75 million rate in September. September starts were 12.3% above the rate in September 2004. Celia Chen, director of housing economics at Economy.com, said she expected single-family starts to be flat this month because of Hurricane Katrina. But starts in the South are up 6.2%. She commented that Census Bureau data may not have captured the impact of the hurricane. At the same time, sales remain strong, and the rise in mortgage rates is attracting more "last-minute" buyers to the table, Ms. Chen said. Economy.com, West Chester, Pa., projects that single-family starts will total 1.69 million for 2005 and drop to 1.58 million in 2006 as the 30-year mortgage hits 7% by year-end.

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