Increased Interest Second mortgage interest rates increased slightly again in December. The increase indicates that interest rates have probably reached their low point in the current economic cycle and will continue to increase slightly through the spring.

Economic Indicators

Support for an upturn in the spring comes from an increase in the Conference Board's Index of Economic Indicators for November 2001. The Index has increased for two straight months, and the November rise was the largest since May of 2001. Four straight months of increases in the Index are a strong indicator of an impending recovery.

Disposable Income

Almost no change occurred in personal income in November after two straight months of sharp declines. Growth in Federal tax rebates and rate cuts were overwhelmed by the impacts of the recession and the terrorist attacks.

High Existing Home Sales

Remodelers will continue to benefit from strong existing home sales, which rose to 5.2 million units in November 2001, only slightly under the very high 5.54 million units of last summer. Home value resumed growth in November as well, with a 5.6% increase over November 2000 to a median price of $147,300.

Confidence Climbs

Further support for an imminent recovery is shown in the 8-point rise in the Conference Board's December Consumer Confidence Index. The increase to 93.7 (up from 84.9 in November) marks the end of a five-month decline and indicates that the economy is close to bottoming out, according to the Board. Most important is that the Expectations Index jumped to 91.5 in December (up from 77.3 in November), which means that consumers are more optimistic about what economic conditions will be in June of 2002. The Board also notes that the increase in consumer confidence indicates that a rebound in the second quarter of 2002is likely. For more information, visit the Conference Board's Web site (