Demand for architectural services, a leading indicator for commercial construction, continues to contract. The Architectural Billings Index rose to 43.1 in July from 37.7 in June. Remember that this is an ISM-style index where anything below 50 indicates contraction, and the index has been doing as much since February 2008. Market closely monitors this index because it leads commercial construction spending by nine months with roughly a 60% correlation. That points to continued declines in commercial construction through the end of this year with a possible rebound sometime in the second half of 2010.

Homeowners failing to catch up on mortgage payments
Have a look at page A2 of today’s Wall Street Journal, “Fewer Catching Up on Lapsed Mortgages”. Homeowners who fall behind on their mortgage payments have become less likely to catch up again, according to a new study from Fitch Ratings. Fitch found that the cure rate (the portion of delinquent loans that return to current payment status each month) for prime loans dropped to 6.6% as of July
from an average of 45% for the years 2000 through 2006.

Threat of double-dip in home prices
Have a look at the Ahead of the Tape column on page C1 of today’s Wall Street Journal, “Double-Dip Threatens Housing Recovery”. The author points out that the recent improvement in the Case-Shiller Home Price Index could be shortlived. “One big problem is in the higher end of the housing market, where there haven’t been as many distressed sales as in the lower end, suggesting prices haven’t fully corrected”.