By Robert J. Sheehan II. Consumer confidence

Consumer confidence fell for the fourth straight month in September, according to The Conference Board. A sagging view of the labor market caused consumers to lower their buying plans for big-ticket durables, such as appliances and cars, as well as for home purchases. This is a threat to the economy because consumer spending carried the economy, even in the recession.

Existing home sales

Sales of existing homes declined by 1.7% in August, even as already very low mortgage rates continued to drop. The main cause is a lack of pent-up demand and uncertainty about the trend in the economy. Home sales remain high, but are shy of the peak reached in January. However, home sales have not dropped enough to have an effect on remodeling demand.

Leading economic indicators

Another sign that the economic recovery is threatened comes from a third straight drop in The Conference Board's Index of Economic Indicators in August. Seven of the 10 index components declined in August. Weakness in the Index does not indicate a double dip recession, but it is moving toward it.

Building material prices

The sharp rise in energy prices over the past year worked their way into the costs of many building materials. Compared with the same period last year, gypsum is up 24%, and petroleum-based plastic products are up 5.9%. Falling softwood lumber prices helped ease the increases, although softwood plywood, which is down 9.5% over last year, is creeping upwards.

Second mortgage interest rates

Financing terms for remodeling projects remain attractive. Second mortgage interest rates dropped another 26 basis points (100 basis points = 1%) to a record low 5.09% in September. This was the sixth straight month in which the average dropped, and rates were 126 basis points lower than last December.