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Housing Starts for July surged by nearly 16 percent to an annual rate of 1.093 million, above expectations and up from the 945,000 in June. Building Permits, a sign of future construction, also came in above expectations while Existing Home Sales for July increased by 2.4 percent from June.

In addition, the National Association of Home Builders Housing Market Index, which is a measure of builder confidence, rose two points to 55 in August from the 53 recorded in July. This was the third straight monthly gain and brings the index to its highest level since the 56 recorded in January. As a rule, 50 is the line between positive and negative sentiment. All in all, these reports are a good sign that the housing sector is coming back strong.

In other news, despite signs earlier this summer that inflation may be heating up, the latest reports show that inflation at the consumer level remains tame. This is good news for Bonds, as inflation reduces the value of fixed investments like Bonds. And since home loan rates are tied to Mortgage Bonds, tame inflation is typically good news for home loan rates as well.