Have households tapped out their credit lines or have they decided to save rather than borrow and spend more? Either way, the continued deleveraging of U.S. households means that demand for large ticket consumption items continues to decline as well, and the decline in demand for housing and commercial real estate has resulted in a flat-lining of construction expenditures.

That seems contrary to recent reports that the Case-Shiller 10 City Home Price Index has actually shown recent improvement in housing prices, but there are other factors are impacting the market.

If we look at the seasonal patterns in the Index, we can see that the string of 4 months of increases is a summer seasonal increase.

Of course, it is possible that the positive Case-Shiller price trend will continue into the winter months, but the falling consumer credit demand is signaling that we are likely to revert to the negative home price pattern for the next several months.