Housing starts rise as permits fall
10/19/2010WASHINGTON - U.S. home construction scaled a five-month high in September, another sign the housing market decline is bottoming, although permits for building fell.
Tuesday's reports were encouraging, but housing starts are stuck at depressed levels and added to the case for more monetary stimulus to shore up the recovery.
The Federal Reserve appears almost certain to pump more money into the economy at its Nov. 2-3 meeting through purchases of government securities, but it is unclear how large the program will be.
"The weakness on the housing front and the potential for a further drag from housing will support greater quantitative easing," Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York, said.
Housing starts advanced for a third straight month, gaining 0.3 percent to a seasonally adjusted annual rate of 610,000 units in September, the Commerce Department said. August starts were revised up to a 608,000-unit pace from 598,000 units.
Economists had expected housing starts to slip to a 580,000-unit rate last month. Compared to September last year, housing starts were up 4.1 percent.