"Bernanke could also bring some depressing news on housing with him into the hearing room. The Commerce Department will report on housing starts and building permits for June earlier in the morning on Wednesday, at exactly the same time the CPI is released. The median forecast calls for a 1.6% decline in starts to a seasonally adjusted annual rate of 1.45 million. Building permits are expected to fall 2.3% to 1.485 million.
Housing starts are down about 24% in the past year, while permits are down about 21%.On Tuesday, the home builders will release their sentiment index for July. After falling to a 16-year low of 28 in June, another decrease is possible in July, our survey says.
"The housing market overall continues to be on the ropes, with another rash of credit quality problems in the subprime lending sector surfacing in recent weeks," wrote Gault and Bethune. The housing market "poses the greatest downside risk to the outlook for the second half of 2007."
Bernanke, like other Fed officials, has insisted that the housing slump won't drag down the rest of the economy into recession.
Bernanke will face some tough grilling from the House committee on Wednesday about the Fed's role in inflating the housing bubble. It's not so much the ultra low interest rates the Fed adopted in 2002 and 2003, but the ultra lax regulation over mortgage lenders that allowed the proliferation of exotic mortgage products that allowed buyers to overpay for homes.
With the inventory correction nearly complete, orders and production at U.S. manufacturers has picked up in recent months. The outlook calls for a 0.6% increase in industrial output in June. The industrial production numbers will be released on Tuesday."
Saturday, July 14, 2007
Upcoming Week: What to expect the Fed to say about housing
While the Fed is expected to remain optimistic about inflation fears and semi-soft manufacturing growth, here's what Marketwatch anticipates for the Housing sector: