Long Term Perspective

Income and interest rates are the two key factors that affect housing activity. More housing construction translates into increased demand for furniture and appliances as consumers refurnish their new homes. In the current business cycle, housing construction appears to have peaked in 2005 even as interest rates began to head higher. Starts were sharply lower in 2006 and 2007 in response to higher mortgage rates and unsold housing inventories.  Tighter lending standards and the credit crunch helped pushed starts lower in the second half of 2007.

Short Term Perspective

Mortgage rates declined in November as conventional mortgage rates decline 17 basis points to 6.21 percent from October’s 6.38 percent.. Housing starts fell again in November, to a 1.187 million unit pace from 1.232 million in October. Starts are down 24.2 percent on a year-on-year basis.