The Commerce Department released a report on housing starts on Wednesday. U.S. housing starts surged in September at their fastest annual pace in seventeen months. The area of big increase in groundbreaking was for multi-family units.

The Commerce Department said the starts increased 15% to a seasonally adjusted annual rate of 658,000 units. The numbers blew away analysts expectations of 590,000 units.

Housing starts for buildings with two or more units rose 51.3% to a 233,000-unit rate. Single-family home construction, which accounts for a larger share of the market, increased 1.7% to a 425,000-unit pace.

Rising demand for apartments and condominiums sparked the rise. “Even with modest job growth, we’re seeing increasing household formation, and that’s really boosting demand for apartments,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “What’s worrisome is the slide in permits. It’s kind of a mixed bag.”

Building permits, declined to a five-month low, indicating foreclosures that are adding to the supply of unsold homes and depressing property values may continue to hold back developers. Housing’s limited rebound is among reasons Federal Reserve policy makers last month announced more unconventional measures to boost demand and spur job growth.

Federal Reserve Chairman Ben Bernanke said on Oct 4 that the central bank was ready to take further steps to boost the faltering U.S. economy. Speaking before Congress’s Joint Economic “Super” Committee, Bernanke said home construction was not aiding the expansion, unlike in prior recoveries. Bernanke testified “the overhang of distressed and foreclosed properties, tight credit conditions for builders and potential home-buyers, and the large number of under water mortgages have hurt home construction.

According to RealtyTrac Inc. said on Thursday that the number of U.S. homes receiving a first-time default notice during the July to September quarter increased 14% as compared to the second quarter of 2011. Although more homes are entering the foreclosure process, those homes are taking longer to either get sold or be repossessed by mortgage lenders.

The increase in foreclosures signal that banks are moving more aggressively against borrowers defaulting on their loans. There was a lull in foreclosures during the “robo-signing scandal” that plagued numerous mortgage lenders. Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors. During that period, foreclosures were sharply curtailed. Now with the increase in default notices, many homeowners could find themselves on the path to foreclosure as banks once again address a backlog of homes in default.

“While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” RealtyTrac’s CEO James Saccacio said.

According to RealtyTrac, banks appear more willing to start the foreclosure countdown on borrowers, but they haven’t put a dent in the overall length of the foreclosure process. In the third quarter, it took an average of 336 days, or 11.2 months, for a U.S. home to go from receiving an initial notice of default to being foreclosed by a lender, RealtyTrac said. That’s up from 318 days, or 10.6 months, in the second quarter and represents the largest average span of time for the foreclosure process since the first quarter of 2007, the firm said.

RealtyTrac is reporting lenders took back 196,530 homes during the third quarter of this year, down 4% from the second quarter and down 32% from the same quarter last year. Banks remain on track to repossess some 800,000 homes this year, down from more than 1 million last year according to RealtyTrac.

The United States Labor Department released data on Thursday that pointed to a modest improvement in the labor market at the start of the fourth quarter. Initial claims for state unemployment benefits dipped 1,000 to a seasonally adjusted 404,000, the Labor Department said, from an upwardly revised 405,000 the prior week.

Non-farm employment increased 103,000 in September after gaining 57,000 the prior month, the department reported last week. While payrolls last month were lifted by the return of 45,000 Verizon Communications workers, key measures of labor market health showed some improvement. For the third straight week, initial claims stayed close to 400,000 which is usually associated with some improvement in the jobs market.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 55,000 to 3.67 million in the week ended October 1. Economists had forecasted continuing claims unchanged at 3.70 million. The number of Americans on emergency unemployment benefits fell 11,412 to 3.02 million in the week ended September 24. The Labor Department reports a total of 6.82 million people were claiming unemployment benefits during that period under all programs, down 39,203 from the prior week.

Employers put the brakes on hiring this past spring, after rising gas prices cut into consumer spending and Japan’s March 11 earthquake disrupted supply chains, slowing U.S. auto production. Recently, gas prices have eased slightly and supply chains are flowing more freely. Hiring still hasn’t improved much. Employers have added an average of only 72,000 jobs in the past five months. Economists agree at least 125,000 jobs per month are needed to keep up with population growth and to reduce the nation’s unemployment rate which still stands at 9.1%.

The Organization of Petroleum Exporting Countries (OPEC) said demand will be about 180,000 barrels per day less than forecast for 2011 and 100,000 barrels per day less than forecast for 2012. OPEC also said it expects no growth in demand for 2012. Oil prices rose sharply on Monday along with the stock market as fears of a recession faded. But, OPEC said Tuesday that the weakening world economy was taking its toll on oil demand, especially in developed nations. Oil prices fell below $85 per barrel Tuesday after the reduced forecast. Oil prices have swung sharply over the past few weeks, affected by volatility in the equities markets.

“Given the decline in oil use by the industrial sector, Saudi oil demand was slightly weaker this summer,” OPEC said.

OPEC, provider of about 40 percent of the world’s crude, announced its biggest-ever supply cuts in late 2008 amid a collapse in global demand. The decision capped production at 24.845 million barrels a day for all members except Iraq.

Members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

“Uncertainties in the oil market are increasing at a time when the recovery of the global economy is losing momentum and is becoming less evident,” OPEC said in its September monthly oil market report. “Over recent months, a deceleration of economic growth was observed in almost every major economy.”

“Next year’s oil demand forecast is based on assumptions such as higher GDP, higher retail petroleum product prices, a strong Chinese economy and uncertainty in total world economy in 2012,” OPEC said. “While the forecast for 2012 implies two scenarios, the lower direction is more likely. A worse-than-expected performance of the US economy might drag down world oil demand growth by 200,000 barrels per day.” the OPEC report continued.

The European Union, International Monetary Fund, and the European Central Bank inspectors also known as the “troika” said in a joint statement that an 8billion euro tranche would be made available to Greece in early November in order to avoid imminent bankruptcy. The “troika’ gave tepid approval to Greece after inspectors found there was some progress on fiscal matters although work is need on structural reform.

“It is essential that the authorities put more emphasis on structural reforms in the public sector and the economy more broadly,” the statement said.

European Union leaders, headed by German Chancellor Angela Merkel and French President Nicolas Sarkozy, are hurrying to put together a second 109 billion euro bailout deal agreed in July. The bailout is intended to prevent the Greek crisis from spreading out of control. The first 110 billion euro bailout proved to be insufficient.

The “troika” confirmed Greece would miss its 2011 deficit target because of a deeper than expected recession but also slippages in implementation. Additional measures, if applied rigorously, should be sufficient to meet 2012 targets. The “troika” stated more belt-tightening would be required to achieve 2013-2014 targets and that should be in place by mid-2012. “It is essential that such measures focus on the expenditure side,” it said, repeating its message that Greece must shrink its wasteful public sector rather than keep levying growth-stifling taxes to cut deficits.

Greece has been forced to implement austerity measures unpopular with its people but necessary to try and regain control of its mounting debt. Strikes by workers continue to plaque the country as unemployment soars, taxes rise, and the Greek people are left feeling hopeless.