U.S. Housing Starts Rise, Though Permits Fall
The pace of new home construction jumped in February by the largest amount in more than a year, but building permits continued to decline, indicating future weakness in the housing market, according a new Commerce Department report today.
Total housing starts rose 9 percent to a seasonally adjusted annual rate of 1.5 million units in February, higher than the 1.4 million units economists had predicted and the largest monthly increase since January 2006. That's a welcome rebound following the decline last month, when construction activity nose-dived more than 14 percent.
Still, there are reasons to believe that the slump isn't over. Fears that the sagging housing market will impact the general economic health of the country lingers. Those jitters were only made worse in the past several weeks as companies working in the subprime mortgage industry went out of business, filed for bankruptcy or fired hundreds of employees as mortgage defaults rose.
Also today, the Fed policy-makers begin their two-day meeting to discuss whether to adjust interest rates. Market watchers and economists are predicting that the central bank will leave interest rates unchanged for the sixth straight time, but the statement it releases Wednesday could provide insight into whether it sees inflation as a bigger threat than the economy’s sluggishness.
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