Builders began work on more U.S. homes than forecast in September on rising demand for apartments and condominiums as more Americans become renters.
Housing starts climbed 15 percent to 658,000 houses at an annual rate, the most since April 2010, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 590,000 pace. Beginning construction of multifamily dwellings surged to the highest since October 2008.
Building permits, a proxy for future construction, declined to a five-month low, indicating foreclosures that are adding to the supply of unsold homes and depressing property values may continue to hold back developers. Housing’s limited rebound is among reasons Federal Reserve policy makers last month announced more unconventional measures to boost demand and spur job growth.
“Even with modest job growth, we’re seeing increasing household formation, and that’s really boosting demand for apartments,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “What’s worrisome is the slide in permits. It’s kind of a mixed bag.”
Housing starts estimates ranged from 560,000 to 643,000 in the Bloomberg survey of 75 economists. August’s pace was revised to 572,000 from a previous estimate of 571,000. Home construction totaled 554,000 units in 2009, the fewest since record-keeping began in 1959.
Consumer Prices in U.S. Rise at Slower Pace
The cost of living in the U.S. rose in September at the slowest pace in three months, signaling inflation may moderate as Federal Reserve officials have predicted.
The consumer-price index climbed 0.3 percent from the prior month, in line with the median projection of economists surveyed by Bloomberg News, a report from the Labor Department showed today in Washington. Excluding volatile food and fuel costs, the so-called core rose 0.1 percent, less than forecast and the smallest gain since March.
Companies like clothing retailer Gap Inc. (GPS) and supermarket chain Safeway Inc. (SWY) have said they are limited in how much they can raise prices to recoup raw materials costs as weak job and income gains squeeze consumers. With inflation less of a concern, Fed policy makers would have the flexibility to take additional steps should the world’s largest economy stumble.
“Inflation is playing out according to the Fed’s script,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The economy is sluggish and businesses are very hesitant to pass on higher input costs to consumers. Consumers are very price sensitive right now.
