Although a slowdown in housing activity is apparent in a wide range of indicators, it seems to be occurring in a gradual way. Notwithstanding their recent slip, both home construction and home sales are still at relatively high levels. The underlying fundamentals of housing demand also remain favorable. Real disposable income is growing at a solid pace.
In the aggregate, household balance sheets appear to be in a good position, even though risks clearly exist for some households. Longterm mortgage rates, although up substantially from last summer's level, remain low relative to their historical experience.