The data on Tuesday had little impact on expectations the
Federal Reserve would ease monetary policy further at its Nov. 2-3 meeting to
shore up the economy and prevent a damaging downward spiral in prices.
The Commerce Department said housing starts rose 0.3
percent to a seasonally adjusted annual rate of 610,000 units, the highest
level since April. August starts were revised up to a 608,000-unit pace from
the previously reported rate of 598,000 units.
Economists had expected housing starts to slip to a
580,000-unit rate. Compared to September last year, housing starts were up 4.1
percent.
"This is not a strong report, but does suggest some
bottoming," said David Ader, head of government bond strategy at CRT
Capital Group in Stamford, Connecticut.
Analysts said the housing data did not alter the view
that the US central bank would ease further.
The Fed, which has already taken benchmark interest rates
effectively to zero and bought some $1.7 trillion in Treasury and
mortgage-related debt, is almost certain to launch a second round of
quantitative easing next month.
"Regardless of what happens with the data this week,
QE2 is still coming," said Zach Pandl, US economist at Nomura Securities
International in New York.
New building permits dropped 5.6 percent to a
539,000-unit pace last month after an unrevised 2.1 percent increase in August.
Permits were dragged down by a 20.2 percent tumble in multi-family units.
Permits for single-family homes rose 0.5 percent last month.
Economists had expected overall building permits to rise
to a 580,000-unit pace in September.
Though the housing market is starting to settle down
after hefty declines following the expiration of a government tax credit for
home buyers, an overhang of unsold homes is stifling recovery.
A survey on Monday showed sentiment among home builders
edged up this month, but remained at depressed levels.
Groundbreaking last month was lifted by a 4.4 percent
increase in single-family home construction. Starts for the volatile
multi-family segment fell 9.7 percent.
Home completions rose 7.3 percent to a 648,000-unit pace.
The inventory of total houses under construction fell 1.6 percent to a record
low 437,000 units last month, while the total number of units authorized but
not yet started dropped 6.9 percent to an all-time low of 81,100 units.
