New home starts hit a 17-year high in October, it was reported Wednesday, as builders broke ground at an annualized rate of 1.96 million homes last month. The result was nearly 3% stronger than September's.

The jump was a surprise as economists predicted a slight slowdown in new building, as is normal when the weather cools. A confluence of events -- low mortgage interest rates, increased consumer confidence and steady incomes -- stoked demand in many large urban areas. The rates on 30-year mortgages averaged 6% last month, still up only modestly from 45-year lows of around 5.25% hit this summer.

This year is going to set records for sales of new as well as existing homes, and these markets are propping up the economy for the third year running. Demographics and low rates play a role, but perhaps more important -- if often ignored -- are changes in the mortgage lending game.

It's much easier to finance a home in the U.S. than it has ever been, and flexible terms (0% down, or 5% or 10%, along with lower monthly payments due to low rates) are making home ownership a reality rather than a dream for two-thirds of American families.

New home starts and existing home sales are likely to slow as the holidays approach, but 2004 could remain "healthy" on the assumption interest rates do not rise too far, too fast. According to the Washington Post, housing economists expect mortgage rates to stay around the 6.5% range for the duration of next year.

Of course, economists and analysts of all kinds are wrong as often as right when predicting macroeconomic events, but it being an election year, the powers-that-be will be working to keep such positives on track.