Housing Starts; Economic Activity
- Nov 20, 2014
Private U.S. housing starts in October came in an annualized rate of 1.009 million units, according to the Census Bureau on Wednesday. That’s down 2.8 percent compared with September, but 7.8 percent above the October 2013 annualized rate of 936,000 units.
Single-family housing starts in October were at a rate of 696,000 units, or 4.2 percent above the September figure of 668,000. Multifamily starts, which tend to be volatile from month to month, dragged the total rate down for the month by dropping 15.5 percent. The October annualized rate of starts for units in buildings with five units or more was 300,000 units.
Residential permits were up for the month by 4.8 percent, and 1.2 percent year over year, according to the bureau. Both single-family and multi-family permits were up for the month, by 1.4 percent and 8 percent, respectively. Permits are a forward-looking indicator of residential development.
Fed Minutes Call Growth “Moderate” Again
The Federal Open Market Committee released the minutes from its Oct. 28-29 meeting on Wednesday, which reached the Fed-typical conclusion that U.S. economic activity continued to expand at a “moderate pace.” Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate, the Fed said in a statement. That is, labor underutilization is gradually diminishing.
When will interest rates go up again? As usual, the Fed was coy on that point. “The first increase in the federal funds rate and the appropriate path of the policy rate thereafter would depend on incoming economic data and their implications for the outlook,” the minutes said. After that, the minutes offered up a lengthy discussion of whether the Fed’s forward guidance should continue to use the term “considerable time” to describe how long it would be before rates would go up. Some members of the committee believe the term is usefully vague, while others do not.
The FOMC also anticipates that inflation is going to be held down over the near term by the decline in energy prices and other factors, but would move toward the Fed’s 2 percent goal in coming years. A few committee members fret that that inflation might persist below the level, however.
Wall Street edged down on Wednesday, with the Dow Jones Industrial Average barely moving, but ending off 2.09 points, or 0.01 percent. The S&P 500 lost 0.15 percent and the Nasdaq dropped a more substantial 0.57 percent.