U.S. Economy: Housing Starts Are Lower Than Forecast

Builders in the U.S. broke ground on fewer homes than forecast and wholesale prices unexpectedly fell in September, giving the Federal Reserve more reason to keep interest rates low to ensure an economic recovery.

Housing starts rose 0.5 percent to an annual rate of 590,000 from a 587,000 pace in August that was lower than previously estimated, a Commerce Department report showed today in Washington. Prices paid to factories, farmers and other producers fell 0.6 percent, the second drop in three months, the Labor Department said.

Builders may be paring back in anticipation of the end of the government’s $8,000 tax credit for first-time homebuyers on Nov. 30. The decline in producer prices confirms the Fed’s view that inflation is “subdued,” helping Fed Chairman Ben S. Bernanke and fellow policy makers fulfill a pledge to keep the benchmark rate at a record low for an “extended period.”

Read Full Article from Bloomberg

- Posted: 2009-10-20 11:53:25

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