Liz – Yes, the drop in home building is a good thing, but a better sign would be when the sales of new home exceed the production of new homes. As long as production outpaces sales, the inventory will increase, and that’s real BAD news.

Louise – I am VERY pleased you are questioning the important things that people tell. First the facts – mortgage rates and 10 year treasury rates are independent markets, and can move in different directions. However, the long term trend is for mortgages like 30 year fixed to follow the 10 year treasury bond. We are approaching the bottom of the decrease in the Fed Funds rate. How low it goes depends on how bad the “recessions” gets. The 10 year treasury has a problem. It wants to follow the Fed Funds rate down, and it wants to build in a “risk cost” for inflation. Even though you don’t see inflation talked about in the press, it is discussed daily in bond circles. My gut feeling is that the 10 year will drop again in the near future providing the Fed cuts the Fed Funds rate by 0.50%, and declares a “downward bias” – meaning that it thinks we aren’t our of the recessionary woods yet. Having said all that, i know you are looking at a mortgage, so my business advice is to lock in a mortgage rate when YOU think it is a good number.