The week started with the Producer Price Index and Retail Sales reports coming out better than expected, sending rates dramatically higher due to the positive economic news. Wednesday, the Consumer Price Index also came in better than expected which should have pushed rates upward further.

However, concerns over the inflation reports coming out of China coupled with more troubling news regarding the debt crisis in Greece caused rates to improve instead.

Today reports on housing starts and building permits were released and came out better than anticipated. Housing starts rose 3.5%, well above expectations. Building Permits, a sign of future construction, jumped nearly 9% to 612,000 well above the 548,000 that was expected, and the highest level so far this year.

The housing sector as a whole still continues to drag on the economy, but a glimmer of hope was reported today!

Dropping interest rates add to housing affordability, which is already at a record level. In many areas it is now cheaper to buy a home than to rent.

These lower rates also create an opportunity for those who missed out on the last refinance opportunity when rates increased to over 5% in April.