Following a disappointing report on the housing market, the Dow Jones Industrial Average (DJINDICES:^DJI) is down 37 points, or 0.24%, to 15,522. The S&P 500 (SNPINDEX:^GSPC) is down 0.36% to 1,685.

There was just one U.S. economic release today.

Report

Period

Result

Previous

Pending home sales

June

(0.4%)

5.8%

The National Association of Realtors reported that its pending-home-sales index fell 0.4% to 110.9 from a revised 111.3 in May. The downward revision in May brings May's growth down from 6.7% to 5.8%. In May mortgage rates started rising from historical lows, and by the end of June had surpassed 4%. The 30-year mortgage rate now sits at 4.35%.

US 30 Year Mortgage Rate Chart

US 30 Year Mortgage Rate data by YCharts.

NAR chief economist Lawrence Yun noted:

"There are some homebuyers who sign contracts with strong lender commitment letters, but have floating mortgage interest rates. Those rates can be locked as late as 10 to 14 days before closing, so some homebuyers may change their minds if the rate rises too much, which apparently happened with some sales scheduled to close in June. Closed sales may edge down a bit in the months ahead, but they'll stay above year-ago levels."

The index is up 10.9% since June 2012.

One factor that has been pushing up prices in the housing market is the lack of inventory of homes for sale. While the jump in mortgage rates could put a short-term crimp in the housing market, over the medium term there is not enough housing to meet demand, and more homebuilding will be needed. Fool contributor Morgan Housel believes this is the "single most powerful and overlooked story in the economy right now."

This week will be an interesting one in terms of economic releases. On Wednesday we get private-sector employment numbers for July, second-quarter GDP, and the Federal Open Market Committee statement. The big question on market watchers' minds is: What will the Federal Reserve announce this week? At the last meeting the Fed indicated that it could begin winding down its monthly asset purchases as soon as the end of the year, so long as the economy keeps improving. We will find out more information on Friday with the government's employment report and the Personal Consumption Expenditures price index, the Fed's favored measure of inflation.

Today's Dow leader
Today's Dow leader is Caterpillar (NYSE:CAT), up 1.2%. This month the company has taken some heat from short-sellers who panned the company because they believe it will suffer from a slowdown in demand in China. Lending credence to that view was Caterpillar's poor earnings report last week, which showed a 43% drop in income. The stock sold off slightly, finishing down 4% for the week -- the worst performance of any Dow component. In what appears to be an effort to appease shareholders, today Caterpillar announced a $1 billion accelerated share-buyback at market prices. The question investors need to ask themselves is whether Caterpillar is buying at an opportune time or simply trying to appease shareholders in the short run. One Fool contributor believes you shouldn't give up on Caterpillar stock just yet

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.