Housing Starts Jump

Tuesday, September 21, 2010 - 2:51pm

Does good news for builders mean good news for the rest of the economy?

The figures for housing starts last month were expected to go up, but not like this.

Construction on new homes soared 10.5 percent, an obvious good sign for those who follow the real estate market.

"We think the bad news is in for housing, not that it's going to get much better quickly, but we do think we're putting in the bottom of housing right now," says Paul Puryear of Raymond James Real Estate Research.

Much of the dramatic increase was in multi-family construction, condominiums and apartment buildings, instead of single family homes.

The news on housing was followed by the Federal Reserve deciding to hold off on any new steps to rejuvenate the economy and help create jobs on the hope the economy may still heal itself.

"Ultimately they set the backdrop in terms of financial conditions that are positive for growth and of course we have seen an improvement in the labor market, it's been disappointing relative to past recovery, but we have seen positive job growth," notes MF Global chief economist Jim O'Sullivan.

The Federal Reserve did lower expectations about growth this year and next, and said it's prepared to provide new relief if necessary.

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