NATIONAL NEWS - Housing starts in the U.S. remained near their lowest level since 1991 in January, a sign the deepest real-estate recession in a quarter century will continue to weigh on the economy this year. Work began on 1.012 million homes at an annual rate, up 0.8 percent from December, the Commerce Department said today in Washington. Building permits, an indication of future construction, fell 3 percent to a 1.048 million rate. Both figures were in line with forecasts.
A glut of unsold homes, mounting foreclosures and falling prices signal the housing slump will continue to detract from growth, setting the stage for more interest-rate cuts. Federal Reserve Chairman Ben S. Bernanke last week said the Fed was ready to act in a "timely'' manner to keep the expansion from faltering. "We don't think housing has hit bottom yet," said Douglas Porter, deputy chief economist at BMO Capital Markets in Toronto. "Until we get some stabilization in sales or even a mild improvement, it's likely that construction will continue to weaken."
A separate report from the Labor Department showed consumer prices rose more than forecast in January. The 0.4 percent increase in the cost of living matched the gain in December. Excluding food and energy, prices rose 0.3 percent, after a 0.2 percent climb a month earlier, leading the so-called core rate to the biggest increase since June 2006.
Starts were projected to rise to a 1.01 million pace from an originally reported 1.006 million rate in December, according to the median forecast in a Bloomberg survey of 72 economists. Estimates in the Bloomberg survey ranged from 950,000 to 1.1 million. Permits were forecast to drop to a 1.05 million rate, from 1.068 million in December, according to the survey median.
Construction starts on single-family homes declined 5.2 percent to a 743,000 rate, the lowest rate since January 1991, today's report showed. Work on multifamily homes, such as townhouses and apartment buildings, increased 22 percent to an annual rate of 269,000 from the prior month. For all of last year, construction began on 1.355 million housing units, the fewest since 1993, and down 25 percent from the previous year, today's Commerce Department report showed.
Last month's gain in starts was led by a 19 percent increase in the Northeast and a 12 percent rise in the Midwest. Starts declined 3 percent in the South and 6 percent in the West. Single-family housing starts in the West were the lowest since record-keeping began in 1959, the Commerce Department said.
Source: AllHeadlineNews.com