Coincident With Lower Interest Rates In August, Both Mortgage Apps And Housing Starts Were Up In August

You can see a big trough in the housing starts in June and July, but August housing starts rebounding and surprised on the upside.

Following the housing starts data today, Moody's summarized the trend in housing data as still one of “softening.”

Moody's painted a ‘darkening picture' then noted housing starts in 2010 are going to be 8% above 2009 levels and cited upside risks in the subsequent quarters to come
The upside risks will begin to outweigh downside risks as long as the Fed does its part to ensure long term rates stay low so the recent uptick in mortgage apps becomes sustainable.

The final outcome determinant here is largely one of interest rates. Rates are poised to go back up as capital flows shift back into riskier assets, so it remains a bumpy road even if the housing data is carving out a bottom...