U.S. housing starts rise, producer prices dip

WASHINGTON - Work began on more U.S. houses in April than at any time in more than a year, and wholesale prices unexpectedly decreased, showing the economy is strengthening without stoking inflation.

Housing starts rose to a 672,000 annual rate last month, the highest level since October 2008, according to Commerce Department figures released yesterday. Another report showed producer prices dropped 0.1 percent, the second decrease in the past three months.

Permits fell last month by the most since December 2008, a sign home building will pause after a tax-induced jump in sales.

Rising raw-material costs aren't making their way up production lines, the price report showed, underscoring why Federal Reserve policy-makers project inflation will be contained.

"It's encouraging to see starts gain some traction, but the decline in permits takes some of the luster off," said Jonathan Basile, an economist at Credit Suisse in New York.

Building permits, a leading indicator for home building, fell 12 percent to a 606,000 annual rate last month, the Commerce Department said. Applications for single-family and multifamily projects decreased.

Housing starts were forecast to rise to a 650,000 annual rate, according to the median projection of 77 economists surveyed by Bloomberg. The Commerce Department revised March data up to 635,000 from a previously reported 626,000.

Starts rose 41 percent in April from the same month last year, the biggest year-over-year gain since 1994.