Rise in Housing Starts Greeted With Caution

Single-family housing starts rose 4.3% in September, but some economists believe it is a temporary blip since homebuilders are struggling with cancellations of sales contracts and high inventories of unsold homes.The U.S. Census Bureau reported that single-family starts jumped from a seasonally adjusted annual rate of 1.37 million in August to 1.43 million in September. David Seiders, chief economist of the National Association of Home Builders, said it is a "little bit disrupting" to see the starts jump up with the level of inventory many builders are carrying. "My judgment is that a falloff of starts is virtually inevitable for October," he said. The NAHB economist noted that cancellations are still rising. However, it appears that sales of new homes may be stabilizing thanks to lower mortgage rates and gasoline prices, as well as concessions by builders and price cuts. "We expect that to sort of stop the bleeding on the demand side fairly soon," Mr. Seiders said.