Housing starts jump 15.7% to 8-month high, suggesting recovery back on track
Housing starts surged to an eight-month high in July, suggesting the nation's housing market recovery is back on track after stalling in the second half of last year.
While the rebound points to sustained economic strength, other data on Tuesday showed inflation largely under wraps, which could give the Federal Reserve room to maintain its ultra-easy monetary policy stance for a bit longer.
“The Fed will find these data further supportive of the go-it-slow approach to exiting its accommodative policies,” said Dan Greenhaus, chief strategist at BTIG in New York.
Groundbreaking for housing jumped 15.7 percent last month to a seasonally adjusted 1.09-million-unit annual pace, the highest level since November, the Commerce Department said. The gain snapped two consecutive months of declines and beat economists' expectations of a rise to only a 969,000-unit rate.
It was the latest sign the market is regaining its footing after being slammed by a run-up in interest rates last year. A shortage of properties for sale has lifted prices, pushing housing out of the reach of many first-time buyers.
Separately, the Labor Department said its Consumer Price Index edged up 0.1 percent last month as declining energy costs partially offset increases in food and rents. The CPI had increased 0.3 percent in June.
In the 12 months through July, the CPI increased 2.0 percent after advancing 2.1 percent in June.
While the so-called core CPI, which strips out volatile food and energy costs, ticked up 0.1 percent for a second consecutive month, economists said there is no evidence the underlying trend in inflation is shifting lower. Rents, which account for more than a third of the CPI basket, increased 0.3 percent in July and were up 2.9 percent from a year ago.
In the year through July, the core CPI was up 1.9 percent.
The Fed targets 2 percent inflation, but it tracks an index that is running lower than the CPI.
Most economists do not expect the central bank to raise benchmark rates until around the middle of next year, given sluggish wage growth. It has kept rates near zero since December 2008.
Average weekly earnings adjusted for inflation rose 0.3 percent year-on-year in July after a 0.2 percent dip in June, the Labor Department said.
“Fed Chair (Janet) Yellen considers income growth as the key to future inflation issues, and since she doesn't see any wage gains just yet, she will likely continue on course,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa.
“As for investors, limited inflation and stronger housing are nothing but good news since they imply good growth ahead without the Fed having to move prematurely.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Real estate union: Howard Hanna buys Langholz Wilson Ellis
- Asked about Cuban cigars’ availability, retailers point to trade embargo
- Americans support strict rules for drones in poll
- ExOne Co. moves solidify authority under CEO
- EPA says it won’t reguluate coal ash as hazardous waste
- Treasury turns profit as it exits GM bailout
- Hospital finances still crying ‘ouch’
- Nonprofit hospitals in Western Pa. feel pain in finances despite Affordable Care Act
- 84 Lumber vice president McCrobie says company, housing market rebounding
- Beacons track shoppers’ smartphones amid retailers’ aisles
- Harmar developer sells 15 hotels in Western Pa., West Virginia