constraint, to which i will return later. additionally, housing may no longer be viewed as the secure investment it once was thought to be, given uncertainty about future home prices and the economy more generally. not surprisingly, the large imbalance of supply and demand has been reflected in a drop in home values of historic proportions. nationally, house prices have plunged about 30 percent in nominal terms from their peak and nearly 40 percent in real, or inflation - adjusted, terms. the imbalance of supply and demand has also been reflected in the decline in home construction that i mentioned earlier. since 2009, the pace of single - family housing starts has averaged less than 500, 000 units per year. during the 15 years before the financial crisis, the pace of single - family starts had never fallen below 1 million units per year. in contrast to the situation for owner - occupied homes, rental markets around the country have strengthened somewhat. in particular, vacancy rates for rental properties have declined and now stand near the lower end of their range over the past eight years. not surprisingly, rents have been increasing and the construction of apartment buildings has picked up. to recap, the housing sector continues to suffer from serious imbalances – a marked excess supply for owner - occupied housing accompanied by a stronger rental markets. the narrative of the housing market over the next several years will revolve around the resolution of those imbalances. broader implications of the problems in the housing market as homebuilders, you naturally pay close attention to the demand for new homes and their prices. these factors are important for the health of your industry, including its ability to create jobs in construction and related activities. but the problems in housing also have important implications outside the construction industry. for instance, consider the effects on neighborhoods and communities. foreclosures, particularly when they are geographically concentrated, can diminish the values of nearby properties. 3 many foreclosed homes are neglected or abandoned, as legal proceedings or national and state level homeowner vacancy rates are available on the u. s. census bureau website at www. census. gov / hhes / www / housing / hvs / charts / index. html. see, for example, john y. campbell, stefano giglio, and parag pathak ( 2011 ), “ forced sales and house prices, ” american economic review, vol. 101 ( august ), pp. 2108 – 31 ; dan immergluck and geoff smith ( 2006 )

better chapters to their lives. significant differences, however, persist across different groups of workers and different areas of the country : unemployment rates for african americans and hispanics are still well above the jobless rates for whites and asians, and the proportion of the people with a job is lower in rural communities. inflation continues to run below the federal open market committee ’ s ( fomc ) symmetric 2 percent objective. the total price index for personal consumption expenditures ( pce ) increased 1. 3 percent over the 12 months ending in september, held down by declines in energy prices. core pce inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, was 1. 7 percent over the same period. looking ahead, my colleagues and i see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely. this favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy. however, noteworthy risks to this outlook remain. in particular, sluggish growth abroad and trade developments have weighed on the economy and pose ongoing risks. moreover, 1 / 3 bis central bankers'speeches inflation pressures remain muted, and indicators of longer - term inflation expectations are at the lower end of their historical ranges. persistent below - target inflation could lead to an unwelcome downward slide in longer - term inflation expectations. we will continue to monitor these developments and assess their implications for u. s. economic activity and inflation. we also continue to monitor risks to the financial system. over the past year, the overall level of vulnerabilities facing the financial system has remained at a moderate level. overall, investor appetite for risk appears to be within a normal range, although it is elevated in some asset classes. debt loads of businesses are historically high, but the ratio of household borrowing to income is low relative to its pre - crisis level and has been gradually declining in recent years. the core of the financial sector appears resilient, with leverage low and funding risk limited relative to the levels of recent decades. at the end of this week, we will be releasing our third financial stability report, which shares our detailed assessment of the resilience of the u. s. financial system. monetary policy over the past year, weakness in global growth, trade developments, and muted inflation pressures have prompted the fomc to adjust its assessment of the appropriate path of interest rates. since july,