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. The rate of housing construction peaked in the first quarter of 1999, but held up well in 2000 and 2001 and accelerated in 2002 while mortgage rates hit new lows.

Short Term Perspective
Mortgage rates dipped in October as yields on 10-year Treasury notes have declined. But the downward trend in mortgage rates may be short-lived as bond investors become worried about the pace of economic growth and the potential of Fed tightening down the road. The pace of housing activity remains healthy in the near term.

Real GDP vs. Final Sales   •   Real Consumer Spending vs. Real Income   •   Debt Burden vs. Savings Rate

Business Fixed Investment vs. Net Cash Flow   •   New Orders   •   Housing Starts vs. Mortgage Rates

Merchandise Exports vs. Trade Weighted Dollar   •   Merchandise Imports vs. Trade Weighted Dollar