Home builders’ fears hinder recovery

By Alan Zibel and Martin Crutsinger


Associated Press

The budding economic recovery isn’t getting much help from the home building industry, which normally creates jobs and drives growth when a recession ends.

Uncertainty over whether a homebuyer tax credit would be extended weighed down construction last month — a sign of how much the fledgling recovery depends on government support.

Home building unexpectedly plunged to its lowest point since April, the Commerce Department said Wednesday. The figures show that builders fear there aren’t enough buyers to soak up the glut of unsold homes.

Congress renewed the homebuyer tax credit earlier this month and broadened its reach.

“It will take a while before residential construction begins to contribute meaningfully to growth,” Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

While consumer prices edged up faster than expected in October, they remain lower than they were a year ago.

The Labor Department said consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with expectations for a 0.1 percent rise.

The higher figure was driven by another increase in energy prices and the biggest jump in new-car prices in 28 years. The prices of used cars and trucks also rose by the most since September 1980. Together, new- and used-car prices accounted for 90 percent of the increase in core inflation last month, government analysts said.