The Economy
Housing starts fell to a 17-year low in August as slower conditions in the housing market continue to force builders to pullback on building activity.  Total starts fell 6.2% to a seasonally-adjusted annual rate of 895,000 in August.  Declines in both single and multi-family housing starts contributed to the overall slowdown in building.  Building permits also continued to correct in August with total permits falling 8.9% to an annual rate of 854,000 units.  Both single and multi-family building permits posted monthly declines to drag issuances to a fresh 26-year low.

Leading indicators fell again in August signaling that further sluggishness can be expected in the coming months.  Leading indicators posted a 0.50 point drop in August while the index for both June and July were revised higher by 0.10 points. The leading index now stands at 100.80, down from an upwardly revised July figure of 101.30. The index is down 1.0 point from its levels six months ago when it was 101.80. This is the second straight month that the leading index has posted a monthly decline.

The economy continued to shed jobs with total non-farm payrolls falling by 84,000 in August.  This is the eighth straight month that the economy has posted job losses while the nation’s unemployment rate has now jumped to a five-year high of 6.1%.

Housing Market
National average mortgage rates declined to 5.78% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on September 18th.  This is the fifth straight week that rates have declined and the lowest they have been since mid-February.  In the week ending September 12th, the MBA’s seasonally-adjusted Purchase Index increased to 380.4 from 371.5 in the previous week.  The latest figure reflects a 2.4 percent increase from last week but a 15.84 percent drop from the same period last year.  Falling mortgage rates have caused purchase applications to increase for four straight weeks while also sparking a jump in refinance activity.

Both new and existing home sales increased in July.  New home sales in July increased from its lowest levels since September 2001 last month.  Sales increased 2.4% in July to a seasonally-adjusted 515,000 homes, up from a revised June figure of 503,000.  Sales for the previous three months, however, were revised lower by 46,000 units.  The number of new homes for sale continued to decline as builders continue to scale back production.  New home inventory declined to 416,000 which is the lowest it has been since October 2004.  In July, median new home prices increased for the second straight month to $230,700.

Annualized sales of total existing homes in July rebounded to its strongest pace since February.  Sales increased 3.1% from June levels to 5,000, 000 units.  Sales of existing homes are down 13.2% from the 5.76 million units in July 2007.  Median existing home prices in July declined to $212,400 from $215,100 in June.  This is the first time since February that median existing home prices posted a monthly decline.  The number of existing homes for sale increased 3.87% to 4.669 million units.  At the current sales pace, there are 11.2 months of existing homes supply on the market which is an all-time high.