The longer-term up-trend in the index is intact. Inventories are extremely lean, global growth is firming and there are mounting unfilled orders.

The trend is still for healthy productivity growth between 2% and 2.5%, and unit labor costs are expected to only slowly rise over the coming year.

There are still lean inventories in a lot of the hot markets and that's why I have a lot of confidence that these balloons won't burst. They're balloons, not bubbles.

You're seeing inventories creeping up and affordability pinching more and more, and you're seeing long-term rates creeping up. All that suggests a trimming of housing activity.

From the tone of his testimony today, it's obvious he sees a pretty strong economy.

Right now, we're seeing upward momentum in long-term rates, especially with new inflation worries. Long-term rates have been so low for so long compared to where they'd normally be in the business cycle -- at some point a correction is necessary.