The housing market remains anemic, challenging home builders and those wishing to sell existing properties. In September, the number of housing starts dropped 10.2% to a seasonally adjusted annual rate of 1.19 million, following up on a 3.2% pullback in August (revised lower from the initially reported 2.6% drop). The new monthly reading realized a new 14-year low and disappointed economists, who were expecting a more modest decline of 4.2%.
On a year-over-year basis, housing starts were 30.8% below the September 2006 level. Earlier this week, the National Association of Home Builders said its index for sales of new, single-family homes dropped to 18 from 20 in September, hitting its lowest point since the data was first tracked in January 1985.
An analyst with JP Morgan noted chalked up the market's continued weakness to problems in the mortgage market, soft pricing, and high inventories, which hurt builder confidence.
In other news, building permits dropped 7.3% to a 1.226 million annual rate, its lowest pace since July 1993. Analysts were expecting a 3.5% drop in the number of permits, following a 4.5% retraction in August.
And elsewhere, September's consumer price index (CPI) ticked 0.3% higher in September, undoing the 0.1% decline posted in August. The reading was a hair above consensus expectations for a 0.2% rise. The core reading, which excludes food and energy prices, rose 0.2%, matching estimates. On a year-over-year basis, consumer prices have risen 2.8% and the core is up 2.1%, near the top end of the Federal Reserve's unspoken comfort zone for annual inflation.