Housing Market Index Solid

Confidence among home builders remains solid, at 65 for June's housing market index which next to May's 66 is the best showing since October last year. And current sales lead the components, at 72 for a 1 point gain with future sales also up 1 point to 71. Traffic, as it has this whole economic cycle, lags badly at 48 though June does show a 1 point gain.

The West is a favorite region for home builders and the composite score here is up 6 points in the month to 75. The South is the largest housing sector and here the score is up 1 point to 69. The Northeast is by far the smallest region for new homes and usually trails badly, but much less so this year with July's composite at 57. The Midwest trails at 54.

These results are solid and should confirm expectations for steady showings in tomorrow's data on housing starts which have been accelerating this year in contrast, however, to permits which have been flat. But permits aside, another month of strength for starts in June will point to the first contribution to GDP from residential investment in the last five quarters and yet another reason not to cut rates at the month-end FOMC.