Analysts formulated that Ben Bernanke's announcement of additional mortgage-backed securities purchases was designed to stimulate the housing market by supporting the modest housing recovery and  stirring job creation in the sector.

But QE3 has yet to turn into a stimulus for housing, according to Capital Economics

The research firm said Tuesday that homebuilder confidence is up, while housing starts are only experiencing a modest recovery.

"Risky asset markets put in a pretty strong showing on Tuesday," Capital Economics reported. "Still, a little over one month on from the announcement of QE3, the Fed is likely to be generally disappointed by the reaction in the financial markets. The U.S. stock market has fallen back a little after its summer rally and yields on agency mortgage-backed securities – which the central bank intends to buy in order to try to invigorate the recovery in the housing market – have rebounded after an initial decline."

Building permits did rise to 803,000 in August, suggesting more starts in September.

But Capital Economics warns the August number may have been lifted by permit filing delays caused by Hurricane Isaac during the summer months.

kpanchuk@housingwire.com