Friday, November 27, 2009

Surprise fall in US home building

The construction of new homes and apartments in the US showed a surprise fall in October.

New US housing starts tumbled 10.6% to an annual rate of 529,000 homes - the lowest level since April.

The decline in construction was led by a fall in demand for both single-family and multi-family occupancies.

Separately, a report showed prices edging up in October. The consumer price index rose 0.3%, pushed up by higher energy prices.

'A weak number'

The housing figures are a blow to recent signs of recovery in the market.

David Resler from Nomura Securities in New York said they were "really disappointing".

"I had convinced myself that we had turned the corner on housing," he added. "I am no longer convinced. This is really a quite weak number."

Congress has voted to extend a tax credit of up to $8,000 for first-time buyers. It had been due to expire at the end of November.

Some analysts said that the uncertainty over whether it would be renewed could have held back construction.

'Whiff of inflation'

Meanwhile, the 0.3% rise in consumer prices was slightly more than expected.

Stuart Hoffman from PNC Financial Services said: "There's a whiff of inflation in that number and frankly it smells a lot like gasoline."

The core rate, which strips out food and energy, rose 0.2%. The US Labor Department said that more than 90% of that increase was down to a spike in prices for used cars and trucks, as well as new vehicles.

No comments:

Post a Comment