New U.S. housing starts fell unexpectedly in December, largely due to unusually cold weather, while wholesale prices rose for a third consecutive month, according to two government reports released Wednesday. The Commerce Department said construction of new homes and apartments fell 4 percent in December to an annual rate of 557,000 units, hurt by a drop in construction activity for single-family homes. However, applications for building permits (seen as a gauge of future activity) jumped 11 percent to an annual rate of 653,000 last month as the industry prepares for the spring selling season. Housing starts for single-family homes fell 6.9 percent in December to an annual rate of 456,000 units after rising 4 percent the previous month. Starts of multi-family apartments rose 12.2 percent last month to a 101,000-unit annual pace after jumping 69.8 percent in November. The housing industry is improving after a three-year slump, and new home construction contributed to economic growth in the third quarter of 2009 for the first time since 2005. Meanwhile, the Labor Department reported that prices at the wholesale level rose 0.2 percent in December as food costs jumped, and wholesale prices recorded their biggest 12-month gain since October 2008. Last month's gain in wholesale prices was far smaller than the 1.8 percent surge in November, as energy prices (which had risen for two months) fell in December. The price performance at the wholesale level, combined with last week's tame reading on consumer prices, supports economists' view that inflation is not a problem.
