The data indicates housing starts have lost momentum for now, which may have been a factor in the Federal Reserve’s decision to maintain its current level of economic stimulus.
Housing starts rose 0.9 percent to a 891,000 annual rate, following the prior month’s 883,000 pace that was weaker than previously estimated, a Commerce Department report showed today in Washington. The median estimate of 83 economists surveyed by Bloomberg called for 917,000. Permits, a proxy for future projects, dropped more than forecast.
While experts continue to be somewhat upbeat longer-term, there’s no denying that the Obama economy continues to lag behind expectations.
Housing starts “seem to have lost momentum, but we see it as a temporary slowdown,” David Sloan, senior economist at 4Cast Inc. in New York, and the second-best forecaster of housing starts in the past two years, according to data compiled by Bloomberg. “Higher rates are a restraint on the housing recovery, but won’t derail it.”