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U.S. homebuilding rose in October amid a rebound in multi-family housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.

Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5% to a seasonally adjusted annual rate of 1.228 million units last month.

Building permits fell 0.6% to a rate of 1.263 million units in October. The market had forecast housing starts rising to a 1.225 million-unit pace last month.

The struggling housing market is in stark contrast with the broader economy, which has enjoyed two straight quarters of robust growth and an unemployment rate at a near 49-year low of 3.7%. Prolonged housing weakness, together with a relentless sell-off on the stock market could stoke fears over the durability of the economy's strength.

In addition to rising borrowing costs, the housing market is also being squeezed by land and labor shortages, which have led to tight inventories and more expensive homes. Many workers are being priced out of the market as wage growth has lagged.

Tuesday's data also suggested that housing supply is likely to remain tight in the near term. Homebuilding completions in October fell 3.3% to a rate of 1.111 million units, the lowest level since September 2017.

Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.

The stock of housing under construction rose 0.5% to a more than 11-year high of 1.137 million units last month. But the multi-family homes segment made up just over half of housing inventory under construction last month.

U.S. retail sales rebounded sharply in October as purchases of motor vehicles and building materials surged, but data for the prior two months was revised lower and the underlying trend suggested that consumer spending was probably slowing down.

Still, the report on Thursday from the Commerce Department showed broad gains in sales ahead of the holiday shopping season, which bodes well for consumer spending and the overall economy as the fourth quarter gets under way.

Retail sales increased 0.8% last month. Retail sales in September slipped 0.1% instead of rising 0.1% and sales in August were also weaker than previously thought.

The market had forecast retail sales increasing 0.5% in October. Sales rose 4.6% from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3% last month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Data for September was revised lower to show core retail sales rising 0.3% instead of gaining 0.5% as previously reported. Core retail sales fell 0.2% in August rather than being unchanged.

Strong domestic demand and a tightening labor market support views that the Federal Reserve will increase interest rates in December for the fourth time this year. The U.S. central bank last Thursday kept rates unchanged, but said data "indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate."

The Reserve Bank of Australia ended its November board meeting with rates held at an all-time low of 1.50%, and signalled policy will stay there for a while yet.

"Inflation remains low and stable," RBA Governor Philip Lowe said in a statement. "Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual."

"Gradual" remains the watchword as inflation stays stubbornly below the central bank's 2-3% target band and wages only barely keep up with consumer prices despite solid job gains.

The bank will issue updated economic forecasts this Friday and Lowe offered a taster on the outlook, noting that inflation would slightly pick up to 2.25% in 2019 and a "bit higher" the following year.

"With the economy growing above trend, a further reduction in the unemployment rate is expected to around 4.75% in 2020," Lowe said.

That is a marked improvement from the previous central bank forecast of 5.25% for mid-2020 in projections released in August. Tuesday's revised forecast follows an unexpected slip in the unemployment rate to 5.0% in September, led by a bumper run in job growth over the past year and as fewer people looked for work.

Financial markets have steadily pushed out the likely timing of a move, with the most distant futures contract for April 2020 pricing in about 80% change of tightening.

The domestic case for a hike has also been weakened by a sharp slowdown in the once red-hot housing market in Sydney and Melbourne.

Values in Sydney, the country's largest city, clocked their worst annual performance since 1990 in October, led by a regulatory clamp-down on investment loans and tighter lending standards by banks.

So far, Lowe hasn't displayed any unease over this downtrend, saying there is still "strong competition for borrowers of high credit quality."

Lowe remained upbeat about the economy and said in recent comments that the next move in rates is likely to be up rather than down.

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