Housing permits will grow 6% this year, to nearly 1.7 million units, which would make 1999 the busiest construction year since 1986, according to U.S. Housing Markets.

Brian H. Bragg, editor of the housing research journal, said the country's demographics will boost the housing sector though interest rates rise.

"We are in a period in the housing industry where we have a larger than normal number of people advancing into their homebuying years," Mr. Bragg said. "Baby boomers in that hot, 35- to 55-year-old age group need to buy and rebuy houses."

Mr. Bragg said several other factors will contribute to a potentially record-setting year.

"This is the greatest peacetime economy we have seen in this country," he said. "Plus there has been a great flow of immigrants, and they tend to want to own homes. If they bring money with them, segments of the country are helped immensely by foreign populations. Just look to the boom on Wall Street-a lot of people feel confident, even if they're not cashing in. They feel wealthy and able to buy a new or bigger house."

Texas, where the publication has forecast a 15-year high of 175,000 home building permits will be issued this year, is expected to be the busiest in housing construction. That many permits would amount to an 11% gain from last year.

"The job growth in Texas is tremendous, and in-migration is great to the state," Mr. Bragg said. "The growth is in good, high-paying jobs, not just hamburger flippers. Oil prices are rising, and there are a lot of high-tech companies going in there. There has also been an influx of corporate expansions and relocations to Texas."

U.S. Housing Markets is estimating Florida will have the second-fastest growth in permits-up 5%, to 155,100-reaching a 10-year high.

California is projected as the only Pacific state where permits will rise; a 6% increase, to 130,700, is predicted despite serious price inflation and shortages of building lots.

"California is still coming off of its early-'90s downturn, but the rebound has been very strong. It stands out in a pretty much lackluster region," Mr. Bragg said. "California has always been a magnet for people, in level times, let alone good times. They are building houses as fast as they can get the dirt to build on."

The boom in Atlanta has helped put Georgia in fourth place, and Mr. Bragg said industry leaders see no end to that state's housing growth.

Last year the Atlanta area issued the most permits in 12 years. This year it is expected to beat that mark by 9%, for a total of 62,000.

Atlanta "started as a hub for warehouses and manufacturing and distribution activity," Mr. Bragg said. "Now it's a corporate headquarters town. Urban sprawl is defined by Atlanta today."

Seven states are projected to issue fewer housing permits than in 1998: Alaska, Arkansas, Hawaii, Nebraska, Oregon, Washington, and West Virginia.

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