The Commerce Department reported Tuesday housing starts increased unexpectedly in October, but there were still signs the housing slump may persist. Housing starts increased 3.0% last month to a seasonally adjusted rate of 1.229 million, surprising economists who had forecast a 0.9% decline. For September, home starts were revised to a 10.2% drop. The October figure equates to a year-to-year 16% drop from October 2006. Building permits fell 6.6% to a 1.178 million annual rate, their lowest level since July 2003, indicating less home building ahead. Economists were expecting a drop of only 4.0%. The drop in permit indicates housing has yet to demonstrate any significant signs of bottoming. Ellen Beeson Zentner, economist at Bank of Tokyo-Mitsubishi, believes housing starts will bottom in the second quarter of next year, before beginning to recover.
Commentary: Freddie Tanks on Earnings Miss, Possible Q4 Dividend Cut • Homebuilder Confidence At Record Low For Second Month Straight
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