The housing market finally produced data that was somewhat more encouraging, although its volatility merits caution. After three straight declines, housing starts rose a huge +12.3% m/m in August to a strong +6.6% y/y rate. Housing permits gained a steep +7.7% m/m to an outsized +12.0% y/y, but to demonstrate the volatility, the y/y rate just last month was only +0.1%. Existing home sales are a bit less volatile and rose +1.3% m/m to a solid +2.6% y/y. Prices for those homes fell -0.8%, the second straight decline, to +4.7% y/y, but that is unfortunately faster than wage growth of +3.2% y/y. The low supply of homes for sale has also been an impediment since the recession and in August it fell to 4.0 months, a five-month low. The bottom line is that August housing data was a significant, if volatile, improvement, but structural issues remain. The Index of Leading Indicators, which projects conditions 6-9 months out, has unfortunately been on a distinct downturn. Out of the past four months it has been positive only once, and the y/y rate has declined to +1.1% in August from +6.3% a year ago.