Housing Starts Plummet to 14-Year Low

But modest consumer price hike soothes inflation fears
By Jonas Oransky,  Newser Staff
Posted Oct 17, 2007 9:49 AM CDT
Construction workers frame a new house Friday, Aug. 31, 2007 in Gilbert, Ariz. Softening of the economy is adding red ink to Arizona state government's projected bottom line. The Legislature's budget...   (Associated Press)
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(Newser) – New homes starts fell to their lowest level in 14 years last month, plunging 10%—to an annualized rate of 1.191 million—after expectations of a 4.2% decline. The number followed a 3.2% drop in August, the Wall Street Journal reports. A homebuilders' confidence gauge registered its lowest number since its 1985 inception. Housing continues to get worse and worse,'' a Deutsche Bank economist told Bloomberg. The contraction will go on into at least the middle of next year."

In sunnier economic news, the consumer price index rose only mildly, giving the Fed a freer hand to cut interest rates again without fears of triggering inflation. The 0.3% September rise reversed a 0.1% August decline, though the critical core CPI—which doesn’t factor volatile food and energy values—but consistent at 0.2% over the 2 months.