Implications:  No one should get bent out of shape by the 3.4% drop in new home sales in August.  New home sales are counted when contracts are signed, not at closing, so Hurricane Harvey surely suppressed sales for the month and Irma will likely do the same for September.  According to the Census Bureau, areas affected by the storms accounted for 14% of single-family homes authorized in 2016.  Survey data in August was only collected from 65% of the sample in these areas versus a normal response rate of 95%.  We expect further uncertainty in the housing data over the next couple of months before we begin to get clean readings again. That being said, we expect a rebound in the fourth quarter.  Although the inventory of unsold new homes rose 10,000 in August, that's not a sign of overbuilding or a reason to be concerned.  All the monthly gain in inventories was made up of homes where construction either hadn't started yet or was still underway, meaning these aren't completed homes sitting unsold that will create a headwind for future construction.  Further, new home completions in the South had their largest monthly drop since 2011 in August as the storm held back activity.  Going forward, there are a few key reasons we are maintaining a positive outlook on housing.  First, job gains continue, which should put continued upward pressure on wage growth.  Second, credit standards in the mortgage market are thawing.  Third, the homeownership rate remains depressed as a larger share of the population is renting, leaving plenty of potential buyers as economic conditions continue to improve.  Look for the upward trend in new home sales to continue in the next few years, which means more room for construction and inventories as well.  In other housing news, the Case-Shiller price index increased 0.5% in July and was up 5.9% from a year ago. That's an acceleration from the 4.9% gain in the year ending in July 2016. Further, the FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.2% in July and is up 6.2% in the past year.  On the manufacturing front, both the Richmond and Philly Fed indexes, measures of sentiment among manufacturers in those regions, increased in September, rising to +19 from +14, and +23.8 from +18.9, respectively.

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