Housing Starts and Building Permits (July, Tuesday 8:30 ET)

F: 602K, 580K C: 598K, 575K P: 582K, 570K

Both housing starts and building permits are expected to rise in July for the third month in a row, indicating that the decline in residential construction could be slowing. Nevertheless, construction remains at extremely low levels with housing starts more than 40% below those of last year. This sector will continue to face challenges as foreclosures further push down the price of existing homes, making them more affordable than new homes. As a result, we might need to see price stabilization and inventory reduction in the market for existing homes in order for there to be a strong recovery in housing starts.


Producer Price Index (Headline, Core) (July, Tuesday 8:30 ET)

F: -0.1%, 0.2% C: -0.3%, 0.1% P: 1.8%, 0.5%

Producers may see a 0.1% drop in headline producer prices in July, compared to a 1.8% increase in June, due to a drop in energy prices, which skyrocketed in the previous month. Furthermore, the rise in core producer prices is expected to slow to 0.2% from 0.5% with modest but widespread increases across most components. Overall, core producer prices remain more than 3% above those of last year, which could help to offset the effect of declining wages, producers’ primary cost, on consumer prices.


Leading Economic Index (LEI) (July, Thursday 10:00 ET)

F: 0.5% C: 0.6% P: 0.7%

July’s LEI is expected to point to further easing in economic contraction by rising for the fourth consecutive month. The majority of the index’s components have shown improvement over the past month. Initial unemployment insurance claims continued to ease, the ISM Manufacturing Index indicated that manufacturers’ new orders increased and the S&P 500 rallied. In addition, building permits are expected to rise for the third month in a row. Declining consumer expectations, however, will have a small negative effect on the index. Overall, continued improvement in the LEI would indicate that economic contraction could ease further in 3Q09, which is in line with our baseline scenario.


Existing Home Sales (July, Friday 10:00 ET)

F: 5.01M C: 5.00M P: 4.89M

The housing market is expected show additional signs of stabilization in July as existing home sales increase for the fifth month in a row due to favorable prices that are attracting buyers to the market. Even though inventories have fallen over the past two months, they remain at elevated levels, which could result in prices remaining low in the upcoming months. In addition, foreclosures are ongoing, which will keep inventories at high levels, putting further downward pressure on prices.