America’s housing crisis deepened yesterday with the release of new data showing that builders began work on fewer new homes in September than at any time in the past 14 years.

Housing starts plunged to an annual rate of 1.191 million last month, a greater than expected 10.2 per cent decrease from August, and the lowest level since the 1,083 recorded in March 1993, according to the Commerce Department.

Building permits declined by 7.3 per cent over the same period, to 1.226 million, indicating that the slump in housing starts is likely to accelerate.

Lou Crandall, chief economist at Wrightson ICAP, the research firm, said: “The housing statistics are simply horrendous. The figure for starts, although bad, is always a little volatile, but the figure for permits suggests that activity in an already weak sector has dropped dramatically.”

The housing situation deteriorated further yesterday as GMAC Financial Services cut 3,000 jobs at its Residential Capital mortgage unit, or 25 per cent of its workforce, as the company reels from the sub-prime crisis.

Ben Bernanke, Chairman of the US Federal Reserve, kicked off a bad week for housing on Monday when he warned that it would be a “significant drag” on the economy into next year.

The following day, Henry Paulson, the US Treasury Secretary, said the housing slump showed no sign of rebounding and posed the biggest threat to the US economy.

Meanwhile, DR Horton, America’s second-biggest housebuilder, announced a 39 per cent year-on-year decline in orders of new homes, to 6,374, in the three months to October.

The Labour Department’s inflation figures, released yesterday, showed that US consumer prices rose at the sharpest rate in four months during September, as energy prices jumped after three months of decline.

However, the “core” price rise, which excludes food and energy costs, was up just 0.2 per cent. The broader Consumer Price Index, CPI, rose at an annual rate of 0.3 per cent in September.

So far in 2007, consumer prices have risen at a 3.6 per cent annual rate, well ahead of the 2.5 per cent increase registered for all of 2006.

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