Housing Starts Surge; Wholesale Prices Edge Up

By MARTIN CRUTSINGER

WASHINGTON (AP) — Housing construction posted a surprisingly large increase in February, bolstered by strength in all parts of the country except the West.

While the surge in construction was far better than the continued decline economists had expected, experts viewed the rebound as a temporary gain given all the problems the housing industry still faces.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent in February compared with January, pushing total activity to a seasonally adjusted annual rate of 583,000 units.

Meanwhile, the Labor Department said wholesale prices edged up a slight 0.1 percent in February as a big drop in food costs offset a second monthly increase in energy prices.

After the news, investors reignited Wall Street's rally, snapping up financial and homebuilder stocks among others. The Dow Jones industrial average and other major indexes all finished with gains of more than 2 percent, with the tech-laden Nasdaq composite index jumping more than 4 percent.

The protracted housing downturn, rising foreclosures and a deepening U.S. recession have battered homebuilders and scared off many potential buyers. Analysts expect mounting job losses and foreclosures and tightening lending standards to continue to suppress home sales.