U.S. housing starts rebounded strongly in July, pointing to momentum in the economy, but a moderate increase in consumer prices suggested the Federal Reserve has room to keep interest rates low for a while.
Groundbreaking surged 15.7 percent last month to a seasonally adjusted annual 1.09-million unit pace, the Commerce Department said on Tuesday, snapping two straight months of declines.
Economists had forecast starts to rise to a 969,000-unit rate in July.
The housing market is regaining its footing after being slammed by last year’s run-up in interest rates. A shortage of properties for sale has also lifted prices, pushing housing out of the reach of many first-time buyers.
In a separate report, the Labor Department said its Consumer Price Index edged up 0.1 percent last month as declining energy costs partially offset increases in food and rents. The CPI had increased 0.3 percent in June.