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Published 00:02, November the 19th, 2009
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Construction of new homes is taking a hit. Construction of new homes is taking a hit.
Photo: GETTY IMAGES
 

Housing construction falls, inflation edges up

Big drop

The Commerce Department said housing starts dropped 10.6 percent to an annual rate of 529,000 units, the lowest since April. It was the biggest decline in 10 months.

 

Construction of new homes in the United States hit a six month low in October, providing more evidence of the economy's sluggish recovery, while a surge in the cost of new and used vehicles lifted consumer prices.

The data came a day after a report showed U.S. industrial output barely budged last month, suggesting the recovery stalled somewhat after a growth spurt in the third quarter.

Analysts said slow healing in the housing market, relatively benign inflation and excess slack in the economy meant the Federal Reserve would be able to honor its commitment to keep interest rates near zero for an extended period.

“It’s going to be a slow, uneven recovery. There has been a bit of a pause in the last month or so,” said Nick Kalivas, vice president of financial research at MF Global in Chicago.

REUTERS