WASHINGTON (AP) ¿ The budding economic recovery is getting little help from the home building industry, which normally creates jobs and boosts growth as a recession ends.
Construction of homes unexpectedly plunged last month to its lowest point since April, the Commerce Department said Wednesday. The weak figures show that builders fear there aren't enough buyers to soak up the glut of unsold homes already on the market ¿ a supply magnified by record-high foreclosures.
They also illustrate how much the fledgling recovery depends on government aid. Builders held back in part because of uncertainty in October about whether Congress would extend a tax credit for homebuyers. Earlier this month, lawmakers renewed the credit and extended it to more buyers.Even with government support, the weakness of the housing sector is dragging on the economy. "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. The tepid recovery is also holding down inflation. While consumer prices edged up faster than expected in October, they remain lower than they were a year ago. And inflation is expected to stay subdued. 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.