While higher mortgage interest rates will slow...

While higher mortgage interest rates will slow the pace of residential construction in California during the next five months, 1987 will still be a strong year for the state’s housing industry, according to Bank of America in its July California Housing Report. The housing market’s impressive performance during the first half of the year virtually guarantees that housing start volume will surpass an annual rate of 225,000 units. California home builders reacted to the 1 percentage point boost in mortgage rates last April by slowing the pace of housing construction in both April and May. Monthly housing starts, which exceeded 290,000 units on a seasonally adjusted annual basis during the first quarter of 1987, dropped to a 213,600-unit level in May.