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Economic and Market Watch Report

4th Quarter, 2007

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© 2008 The Northern Nevada Regional MLS and
NATIONAL ASSOCIATION OF REALTORS®
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.................................. We are committed to providing real estate professionals with superior real estate market information services and technology......................................000 real estate professionals throughout eight counties in the Northern Nevada and Lake Tahoe areas........................ 11 Economic Monitor* ..................................................................... 2 Lyon County ................................................................................................................................ 9 Chief Economist's Commentary* .......................................................... Index Local Report Nevada Churchill County .......................................................................... NNRMLS is pleased to expand services to our members by providing the Economic and Market Watch Report..... designed to help identify current and future economic and real estate trends that affect our market and our industry........................................................ 8 Trends ........................................................................ 10 Local Forecast ............................................com........................................................................... The Northern Nevada Regional MLS Economic and Market Watch Report The Northern Nevada Regional MLS provides services to almost 3......... Reproduction............. 13 *Reprinted from Real Estate Outlook: Market Trends and Insights......................................................................................................... .................................. Properties for sale can be found on-line at realtor.. reprinting.3 billion dollars in residential real estate sales transactions were reported through the MLS in 2003................................ Used with permission............................................................ or retransmission of this article in any form (electronic media included) is prohibited without permission................................................... 5 Carson City ................................... Over 2.000 property listings and public records information from five local counties.... rgj............................................................................ For subscription information please call 1-800-874-6500................... The NNRMLS system hosts content on over 160......................................... 4 Washoe County ........ ©2008 NATIONAL ASSOCIATION OF REALTORS ®............................................... 1 Douglas County ................. 3 Storey County ............... 7 Others ................com and on countless broker websites throughout the region................................

**** Days on market is defined as the difference between the list date and contract date. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $223. *** During the first two months of 4th quarter.58% 128 48. NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment increased by 28 jobs in Churchill County during October and November.600 39.20% 1 -50. However. The combined effect of these two trends was an increase in the average monthly unemployment rate from 4. 31.700 $192. ** May not add to total of zip codes.300 # Homes on the Market * 341 245 # Homes Sold ** 64 62 *** # New Homes Built *** 6 29 Avg # of Days on Market **** 134 126 * Available as of Dec.6% *** % Change of current quarter compared to the same quarter to year ago.45% 61 -7.00% 42 95. Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89406 $191. 2007. 1 .500 -16.5% for the third quarter to 4.7% in the first two months of the fourth quarter.0% OTHER $243. Local Report Churchill County. while historically low mortgage rates should continue to spur sales. the number of job seekers also increased. The solid job growth will help to build housing demand.

300 58. Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89410 $400.67% 181 88.966. NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment declined by 348 jobs in October and November.1% 89460 $358.600 -30. ** May not add to total of zip codes.00% 173 86.700 20.900 21. *** During the first two months of 4th quarter. Despite the job losses.85% 7 -30.76% 14 -12.74% 9 -66.800 19.500 -12.5% OTHER $216.500 -2.1% 89705 $267.4% for the first two months of the fourth quarter. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $557. **** Days on market is defined as the difference between the list date and contract date.00% 270 90.3% 89423 $432.20% 3 -66.67% 3 200.67% 180 89. The job losses brought about an increase in the average monthly unemployment rate from 5. 31. 2 .400 -17.25% 27 -37. Local Report Douglas County.2% in the third quarter to 5.5% 89411 $971.700 112.21% 91 91.700 # Homes on the Market * 1. employment will help to build up demand for housing. the job situation still remains strong in Douglas County.67% 75 17.600 $545.305.96% 32 -25.50% 161 87.5% 89448 $1. 2007. Combined with historically low mortgage rates.84% 10 -16.4% 89413 $2.2% 89449 $888.57% 30 -37.58% 163 90.50% 67 88.041 807 # Homes Sold ** 174 135 *** # New Homes Built *** 35 25 Avg # of Days on Market **** 131 141 * Available as of Dec.6% *** % Change of current quarter compared to the same quarter to year ago.

Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89403 $236.83% 18 -48.0% 89429 $153.000 65. 31. The combined effect of these two trends was an increase in the average monthly unemployment rate from 6.400 -13.3% 89430 $710.4% for the third quarter to 6. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $220. Local Report Lyon County.12% 1 0.00% 69 94.700 # Homes on the Market * 1. ** May not add to total of zip codes.300 -19.7% in the first two months of the fourth quarter.7% 89447 $148.06% 13 -13.33% 1 0.57% 100 84. **** Days on market is defined as the difference between the list date and contract date.00% 252 83. 2007. 3 .000 -33.163 850 # Homes Sold ** 171 130 *** # New Homes Built *** 75 17 Avg # of Days on Market **** 102 115 * Available as of Dec.8% OTHER $145.33% 182 85. However. while historically low mortgage rates should continue to spur sales.19% 62 -28.00% 72 97.100 -10.6% 89444 $390.74% 111 90. *** During the first two months of 4th quarter. The solid job growth will help to build housing demand. the number of job seekers also increased.01% 3 -70. NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment increased by 232 jobs in Lyon County during October and November.800 -18.1% 89408 $198.800 $200.89% 106 89.700 -28.5% *** % Change of current quarter compared to the same quarter to year ago.23% 32 -28.

*** During the first two months of 4th quarter. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $273. **** Days on market is defined as the difference between the list date and contract date.400 $252.83% 11 -42. employment will help to build up demand for housing. 4 .11% 100 91. Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) OTHER $252. NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment declined by 2 jobs in October and November. The job losses brought about an increase in the average monthly unemployment rate from 4. Local Report Storey County. ** May not add to total of zip codes.6% for the first two months of the fourth quarter. 2007.1% *** % Change of current quarter compared to the same quarter to year ago. 31. Despite the job losses.400 # Homes on the Market * 103 81 # Homes Sold ** 16 11 *** # New Homes Built *** 3 1 Avg # of Days on Market **** 109 99 * Available as of Dec.400 3. Combined with historically low mortgage rates.8% in the third quarter to 5. the job situation still remains strong in Storey County.

NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment declined by 226 jobs in October and November.2% 89433 $188.800 # Homes on the Market * 4. 5 .44% 82 89.800 4.900 -15.834 3.8% 89434 $256.500 11.47% 89 89. **** Days on market is defined as the difference between the list date and contract date.37% 4 -33.02% 1 0. Local Report Washoe County.000 0.200 41.7% 89442 $205. The job losses brought about an increase in the average monthly unemployment rate from 4. Despite the job losses.80% 104 -32. 31. Combined with historically low mortgage rates.060 796 *** # New Homes Built *** 552 300 Avg # of Days on Market **** 81 95 * Available as of Dec.608 # Homes Sold ** 1.7% *** % Change of current quarter compared to the same quarter to year ago.7% for the first two months of the fourth quarter.700 -14.00% 143 93. 85 85. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $354.800 23.95% 48 -18.34% 28 -41.7% 89436 $342.99% 41 -47. *** During the first two months of 4th quarter. 1 .08% 10 42. Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89431 $206.64% 79 89.8% 89450 $327.50% 2 100. ** May not add to total of zip codes.300 -12. employment will help to build up demand for housing.67% 103 89.1% 89451 $836.5% 89439 $343.00% 305 80.33% 214 74. the job situation still remains strong in Washoe County.900 $352.5% in the third quarter to 4.86% 194 10. 2007.0% 89501 $402.000 .

500 -18.35% 70 -21.1% 89503 $254.06% 78 -45.63% 107 90.600 -11.2% 89509 $390.66% 10 -9.4% 89521 $336.35% 95 91.65% 34 -2.41% 95 87.86% 79 90.4% 89512 $198.1% 89511 $708.88% 63 -28. Local Report Washoe County.400 -1.400 -9.100 -10.000 -57.53% 43 -18.3% *** % Change of current quarter compared to the same quarter to year ago.200 16.75% 1 -66.09% 141 81.45% 112 87.87% 90 90.88% 104 -35. 6 .600 -6.1% OTHER $511.67% 26 78.84% 49 -54.6% 89704 $572.200 -13.43% 93 88.40% 90 91.4% 89510 $250.20% 60 -25.100 -7.7% 89523 $385.12% 45 221.93% 81 90.6% 89506 $235. NV Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89502 $262.400 -11.

The combined effect of these two trends was an increase in the average monthly unemployment rate from 5.00% 114 81.2% for the third quarter to 5.000 -47.400 $289.23% 1 -50.4% *** % Change of current quarter compared to the same quarter to year ago.81% 26 -50.900 11. 2007.2% OTHER $281.85% 100 88.45% 47 -29. Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 89701 $238. 31. Local Report Carson City. *** During the first two months of 4th quarter. However.9% 89703 $395. **** Days on market is defined as the difference between the list date and contract date. while historically low mortgage rates should continue to spur sales.4% in the first two months of the fourth quarter. Housing Market : Q3' 07 Q4' 07 Q1' 08 (Forecast) Average Price $282. 7 . the number of job seekers also increased. NV Buyer's Seller's 1 2 3 4 5 Market Market Labor Market : Employment increased by 3 jobs in Carson City during October and November. The solid job growth will help to build housing demand.00% 271 85.50% 122 87.600 1.0% 89706 $266.300 -18. ** May not add to total of zip codes.200 # Homes on the Market * 596 419 # Homes Sold ** 129 102 *** # New Homes Built *** 7 0 Avg # of Days on Market **** 81 111 * Available as of Dec.85% 28 -12.

7% 34747 $274.00% 63 94.9% *** % Change of current quarter compared to the same quarter to year ago.32% 7 40.000 -6. 407 84.000 .800 -29.700 17.000 -3.00% 374 81.7% 96150 $541. 1 . 1 .3% 96120 $373. 8 .29% 157 84.44% 3 0. 143 85.78% 5 -64.04% 3 0.00% 72 90. 1 .000 . 62 85.6% 89415 $107.5% 89422 $85.4% 89419 $115.00% 88 92.4% 96107 $224. Local Report Others Data by Zip Codes for Q4 2007 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 32821 $127.500 -31.88% 3 -25.000 .

The recent shake up in the mortgage market has conferred on buyers the last of the important perquisites for it to truly be a buyers market. more paper work and took significantly more time. making them more appealing to sellers. For months now the media has been portraying the downside of the transition of this housing market from a sellers’ to a buyers market.96% for example) versus just 23 basis points back in early July of 2007. Finally. the spread between conforming and jumbo rates rose to 96 basis points (e.3% of the market falls into the jumbo category. From June of 2005 to July of 2007 the average 30-year fixed. foreclosures have risen. forgoing improvements. Consequently. many would-be buyers chose to forgo buying rather than get stuck with risky loans. But for every looser there is a winner and now it is buyers’ time to reap the benefits. it has not been a buyers’ market. Regional Economics Buyers have been bombarded with horror stories lately. In the fourth quarter of 2007. It is the difference between a door wide open and a door firmly shut.000 limit is crucial to investors in mortgage backed securities because it is the maximum value of a mortgage that the GSEs will back. During the hay-day of the housing market. The opportunities for those who can find homes under the conforming loan limit are boundless and buyers’ agents should be steering their clients with this in mind. 9 . and they are beginning to take note. Despite what many pundits have argued for a year or more.6% compared to the same period in 2006.000 and those that do not. NAR has worked tirelessly to get the conforming loan limit raised by Congress. inventories are near record levels. conforming mortgage climbed from 5. help with financing or closing costs or any other means to help the buyer afford the down payment that might put them into a conforming loan. it will help to restore confidence in a substantial portion of the jumbo market and re-energize the higher-end market.5% versus 9. But soon they will face rising rents and they will be forced to ask them selves whether to continue to rent or to buy. This market can seem dire for those in higher priced markets. Here in the area covered by the Northern Nevada Regional MLS roughly 18. but the door is not shut to all. and to make price or financing concessions. out right price declines are being reported at the national level and in many local markets. When they re-evaluate this decision. via reduced price. while the rest are conforming. the sharp increase in jumbo rates is not having a strong effect on properties priced over the conforming limit. This combination pushed affordability down as monthly payments rose beyond what was realistic for most buyers. Now. sales of homes in the jumbo price range fell by 32.7%. If this legislation is passed. seller’s agents should take note. This analysis suggests that. they will a find a much more pleasant landscape. But this opportunity has not been extended to all segments of the buying market. The winds are blowing with buyers who’ve been disgruntled and move to the side lines. The $417. FHA reform has reduced many of the once onerous requirements on these loans. This implicit insurance against default risk is the only thing that has kept funding in the mortgage market at all. Prices were flat or rising in the face of mortgage rates that were climbing. Sales have fallen sharply. to fix issues with their property prior to sale. because FHA mortgages require appraisals. that moving their clients to market to this category. is critical.5% for sub-prime. The recent mortgage market melt- down extended the spread between loans that fall under the conforming loan limit of $417. Home sales slowed and days on market rose. buyers could scarcely use FHA loans. Finally. Trends Jekyll and Hyde…A Market with Two Faces By Ken Fears Manager.1%. Buyers that are using mortgages above this limit.0% and 6. the difference between 6. The last straw snapped with the virtual elimination of the sub-prime market. to accept appraisals. called jumbo loans. But the recent sub-prime fallout pushed already extended sellers to do things that they were hoping not to. and homes are sitting on the market longer. Sellers simply would not entertain bids from bidders with these mortgages in the face of so many other buyers who were willing to find other means of financing that were more appealing for sellers. But isn’t this a good thing for buyers? Yes. The difference for a buyer on the margin between a conforming loan and a jumbo loan is immense. by comparison. while conforming rates have slipped. face much higher mortgage rates. Sales of homes in the conforming category fell by 43.6% to 6.g. sellers don’t have that luxury and buyers have the upper hand on this and many other parts of the negotiation process. but buyers were not buying…and they shouldn’t have. Likewise. On average. which carry average rates of 6.

the rates are closer to 7% due to the investor fear of anything U. The direct higher sales would likely induce other hesitant buyers into the marketplace. In 2001. one policy measure that can lift buyer confidence is raising the GSE (Fannie Mae. High inventory depresses home prices. As I mentioned briefly last month in this column. etc. and other items after purchasing a home. I’d say the average would be $4. NAR Chief Economist Though unlikely given abundant pent-up demand.000 additional home sales o $44 billion in increased economic activity o $274 to $411 per month savings in interest payments for consumers who get new “GSE jumbo” loans versus current private jumbo loans o potentially 500. Any further weakening in the housing market and its related housing wealth impact will likely throw GDP growth into negative territory — by a full two percentage points. it will do so with improved underwriting standards.. It’s another cycle – but not a vicious one. A $417. But there are several major factors that may be holding buyers back. estimated to be about 9% of the home sale price. It is widely believed that the Federal Reserve will be cutting interest rates in the next two meetings of the Federal Open Market Committee.3%.000 will result in: o 348. There is also the multiplier effect. The owner of that restaurant buys a plasma screen TV. This situation. rates on jumbo loans would be about 6. Freddie Mac) loan limits. Trade-up buyers spent $5. In addition. Rising foreclosures also push prices downward. Obviously those amounts would be greater today – conservatively. Higher foreclosures lead to further pessimism among potential buyers. government. I should note here that NAR advocates a one-time large rate cut rather than a series of small rate cuts in order to end the delay in home buying. Falling home prices raise foreclosures.. The home inspector who earned a fee on that home sale goes out to dinner at a restaurant. Any strengthening in home prices could possibly have the biggest impact in lowering foreclosures. Anticipated lower home prices are holding back many people from buying a home now. The vacation resort hires additional workers.000 to 210. But the timing of its return remains very uncertain. Each home sale contributes to GDP. Rather. While some subprime lending will return. not only impacts homeowners and the housing industry but could easily spread to the broader economy. we are faced with the possibility that the housing market could spur a vicious cycle.). carpet.000 would enable more households to enter the housing market using a conventional mortgage. mortgage that does not have a (perceived) backing of the U. The market is fragile due to excessive pessimism among potential home buyers. Foreclosures will continue to rise in 2008.S. Any rational home buyer will balk at such a higher interest rate. The TV salesperson takes his/her sales commission and takes a vacation. That could push the economy into a virtually “no-growth zone” and very close to an economic recession. It had comprised about 20% of mortgage originations. There is also income generated by real estate services (moving companies. appraisers.500 in direct economic activity. More home sales will lower inventory and thus strengthen home prices. Commentary Spinning the Wheels Lawrence Yun.000 home sale generates $37. mortgage lending. Subprime lending has virtually disappeared since August.500 on furniture. Those workers will buy a home . The cycle starts again. Why are buyers hesitant? Obviously each household makes its own decision as to whether or not it’s time to purchase a home. While there is no direct relationship between a Fed rate cut and mortgage rate changes. painting.000 to $625. A lack of buyers pushes up inventory. the psychological effect of rising foreclosures affect people’s outlook on housing. inspection. Current conforming mortgages average about 6%. A simple lifting of the loan limit from its current $417. How to stop this vicious cycle? Any boost to buyer confidence will have a significant impact in reviving the housing market and in lifting the economy. 10 . many consumers perceive that mortgage rates will fall with the later cuts. a stricter and sounder regulatory environment. a typical first-time home buyer spent $3. driven by a lack of buyer confidence. faucets.S. What does that mean in “real life?” We estimate raising the GSE loan limit to $625.2% or 6.000.000 All this will help improve our economy. Anticipated lower interest rates are also restraining potential buyers. and with proper pricing of risk. Based on historical trends.000 refinancings of jumbo loans at lower interest rates o a reduction in the national months’ supply of homes on the market by one month o strengthen home prices by two to three percentage points o a reduction in the number of foreclosures by 140. The jumbo mortgage market is not functioning. A recent pick-up in FHA loan endorsement is very encouraging in bringing some would be subprime borrowers into loans with much safer interest rates and in helping some homeowners refinance out of the riskier subprime loans.500. 2007.

Because of this push and pull on the consumer psyche the forecast has become more uncertain. other consumers will continue to wait out to see the bottom in housing before making the move. economy in the fourth quarter of 2007 was affirmed by very soft job figures for December. Vice President.000 net new payroll jobs were added during the month compared to 119.000 at end of November.0%.000 (monthly) in 2006. With the stimulative packages of tax cuts and lower interest rates underway. NAR’s pending home sales index remains soft. possibly hinting at stabilization and a formation of a bottom. Those figures are down by roughly 50% from their respective peak annual figures in 2005. though it has been essentially flat for the past four months. Current housing market conditions remain weak. It is SUSTAINTABLE homeownership that benefits all. It is possible there could be a quick turnaround to the housing market. On the other hand. NAR Research The weakness in the U. A market timing strategy nearly always brings regrets – bought too early or bought too late. no one should over-extend herself to become a homeowner. There were 509. but new home inventory has been trending down for more than a year. As to the Northern Nevada MLS serving region.000 to 900. the economy will avoid recession. New home construction and new home sales have contracted even more. The unemployment rate rose to 5. But people who are purchasing for a non-flipping reason of five or more years can be nearly guaranteed that they will come out ahead. its highest level in two years.000.400 jobs in the past 24 months. they have brought down housing inventory. The national existing home sales have been right at or near 5 million for the past three months. But. home sales fell 21% in 2007 even though the region added 8. Recent new single-family housing starts have been in the range of 800. Forecast The Forecast By Lawrence Yun. Only 18. we have buyers waiting it out. Improved financial capacity and improved housing affordability will be enticing for some consumers.000 and new home sales have fallen well below 700. The current level of activity is far below that of even the pre-boom year of 2001. hoping for lower home prices and lower interest rates. Housing supply is one of those figures that is usually not in the headlines. The higher loan limit on FHA and GSE loans will further permit more people to access low interest rate loans. 11 .000 new homes for sale in the summer of 2007. Yet. On the one hand we have a sizable pent-up demand from 4 million job gains in the past two years. after having treaded at around 4. Will housing demand return solidly by spring of 2008 — even after we account for the normal higher sales activity in the spring months? It is a bit uncertain.5% in the first half of 2007.000 monthly job gains for the rest of 2007 and 189.S. Though the cutbacks are hampering the economy. But the current annualized sales pace would only match the 1998 annual figures (10 years ago) and are down 20% from a year ago and down 30% from the peak year of 2005. There were 570. It is in no one’s interest to see rising and then falling homeownership rate. The near-term forecast continues to point toward weak conditions.

7 216.8 4.2 5.7 -2.1 4.411 5.1 6.5 Prime Rate 8.300 1.2 -4. * Billion dollars Source: Forecast produced using Macroeconomic Advisers quarterly model of the U.4 -17.4 253.3 1.1 -0.0% 3.0 3.7 2.1 354.8 11.0 1.3 Percent Change -.2 5.7 4.9 3.0 Local Region Payroll Jobs (in thousands) 227.884 5. economy.0 236.5 5.917 5.9 228.3 2.7 19.9% 4.4 1.0 Residential Construction -16.5 -1.3 1.9 0.1 358.9 -4.530 5.9 -32.0 241.9 8.7% Home Prices -4.2 Interest Rates.0% 6.5 1. Percent Fed Funds Rate 5.9 National Home Prices Thousands of Dollars Existing Home Prices 223.5 1.S.1 6.0 -21.8 0.1 1.9 214.6 1.6 5.056 1.2 2008.0 4.4 -15.3 5.0 6.5 2.8 4.380 5.652 5.7 5.8 2.S.957 4.1 4.3 248.7 -13.0 3.5 0.Year Ago Existing Single-Family Sales -10.7% 4.0 -12.9 -16.1 0.8 -20.7 -5.1 0.3 233.0 226.6 -33.2 -24.4% Home Sales -18.6 -32. Economy Annual Growth Rate Real GDP 3.9 4.085 1.4 1.4 Consumer Prices 6.6 235.9 4. Lawrence Yun.8 5.0 New Single-Family Sales -21.5% 13.5% 0.6 4.7 Nonfarm Payroll Employment 0.5 -6.3 -1.9 231.5% 0.0 -13.0 3.845 5.464 1.1 4.0 -23.4% -20.1 Home Sales 1887 1639 1260 1049 1668 1721 1367 1190 1818 1835 6376 5806 6255 Home Prices (in thousand $) 363.4 2009.4 3.1 -1.3 4.8 4.6 5.3 6.166 990 830 791 781 773 752 737 726 748 1.5 4.4 3.8% -8.2 Percent Change -.5% 1.0 -4.9 -9.4% -2.7% 1.3 5.7 1.5 -33.7 231.4% -31.1 -26.4% -1.5 5.9% 7.9 6.9 5.0 4.6% -20.8 3.7 -1.2 2.0 4.4 2.075 1.3 5.1 246.3% 2.3 226.2 1.5 -18.8 4.2 6.7 2.5 -15.0 3.0 -4.4 -1.1 -16.8 -20.5 Consumer Confidence 110 107 106 91 87 85 85 86 90 92 103 87 92 Percent Unemployment Rate 4.6 1.4% 0.9 3.8 5.0 -4.8 0.2 2007.6 Corporate Aaa Bond Yield 5.7 7.2 -6.1 240.8 4.9 368.2 5.2 362.5 -16.051 1.4 5.4 Real Disposable Income -0. Forecast Economic and Housing Market Outlook: February 2008 Quarterly 2007.5 30-Year Government Bond 5.9 0.6 4.0 343.3 4.2 2.0 6.3 3.3 6.9 -26.9 -17.8 -2.9 228.8 4.1 237.6 5.7 -5.3 4.1 2009.9 216.4 -10.4 227.3 2007 2008 2009 U.0 340.8 227.2 7.6 3.068 Single-Family Units 1.073 1.6 5.2 Multifamily Units -12.0% -34.0 0.0 -0.3 1.7 -24.056 1.8 3.0 18.8 4.151 1.3 -28. Assumptions and simulations by Dr.3 5.8 3.0 -3.0% 0.9 2.6 5. 12 .5 5.0 -5.6 6.3 -26.8 5.982 5.3 2007.7 3.5 3.5 6.8 Mortgage Rates.8 369.4 2.3 2008.9 224.6 Housing Starts -21.2 4.6 0.1 342.4 5.2 4.3 -23.3 223.0 347.0 -8.9% -6.1 5.4 3.3 3.2 5.0% 8.7 2.2 3.2 -4.5 6.9 221.8% Quarterly figures are seasonally adjusted annual rates.8 4.2 208.8 5.7 6.9% 1.7% -1.354 1.1 2.5 -7.8 -7.6 4.7 3.3 1.9 -23.3 -8.2 3.8 4.2 241.2 5.7 4.7 10.1 242.9 -25.9 4.3 5.1% 1.046 774 742 Multifamily Units 299 310 321 320 304 302 305 319 325 326 308 307 326 Residential Construction* 491 463 433 406 395 392 389 387 385 388 473 396 388 Percent Change -.5 1.1 230.3 -0.1 6.4 -0.5% 1.2 New Home Prices -2.0 11.4% 9.111 1.1 207.3 Single-Family Units -23.3 -28.8 6.7 4.4% 0.2 218.8 -19.2 New Home Prices 241.Year Ago Existing Home Prices -1.6 3-Month T-Bill Rate 4.0 5.Year Ago Jobs 1.9 2.0 6.0 4.7 4.8 2.0 National Housing Indicators Thousands Existing Single-Family Sales 5.4 2.1 5.0 2.3 8.9 4.9 -3.2 228.912 4.0% -11.8 223.0 3.595 New Single-Family Sales 855 730 654 641 633 633 643 678 675 703 774 637 685 Housing Starts 1.3 3.2 2.6% 1.3 1-Year Adjustable 5.7 3.4 3.2 6.4 385.8 -4.7% -5.5 4.1% 0.420 4.7 5.6% 5.0 200.1 -4.7 368.1 4.8 373.3 3.082 1. percent 30-Year Fixed Rate 6.3 -1.5 4.2 2009.0 2.9 229.9 236.3 5.0% 0.4 4.0 3.2 6.4 2.7 10-Year Government Bond 4.6 -26.3 6.1 2008.2 2.637 5.2 3.8 8.2 1.4% -1.3 4.8 4.0 231.7 -26.6 5.9 231.9 5.3 -19.0 1.0 6.6 5.4 -1.7 5.0 2.5 3.4 5.3 -0.3% 2.8 1.3 2.4 2008.7 4.9 2.5 4.

4% increase from October’s pace but 20. Declines are needed due to high Nov 06 1.000. Still. The median price of an existing Nov 07 5. generally a reliable future indicator Oct 07 1. Likely Direction Recent Over the Next Forecast Monthly Indicator Statistics Six Months Existing Home Sales registered 5.980 then beginning to June. Housing Affordability dipped ever so slightly in November. Notes: All rate are seasonally adjusted. Sources: NAR.232 has been falling housing starts.4.21% historic lows by continuous rate cuts by the Federal Reserve. existing home sales.000 and over the past 12 months 1.5% to 1. New home sales. and housing starts are shown in thousands.3 October’s revised reading of 119.565 but more is required inventory. This is the third and final “estimate” of GDP Very slow growth growth based on more complete data.7% off October’s level and 24. Even so. Inflation is shown as the month-to-month change in the Consumer Price Index. Employment growth is shown as month-to-month change in thousands.7 family home. That is the lowest rate since the peak of Dec 07 6.4 rate was offset by an increase in the median price of an existing single. More cutbacks are encouraged to better help stabilize the housing market. Housing permits.0% Even sales over lower than the pace in November of 2006. and most of the measurable declines in more rounds of sales have already occurred.15 million.1% economic software. non.000 new jobs would be Nov 07 110 modest. though new jobs added to the economy. when the index was 110. Mortgage Rates The 30-year fixed mortgage rate trended lower in Interest rates will December to an average of 6. fell 1.19 million units – 3. The pace was 34. Bureau of Labor Statistics. will considered healthy.14% through the first further rate cuts early this year to curb a growing fear of recession. Economic Growth Real gross domestic product – GDP – grew 4. The inventory of new homes available for Oct 07 711 taken place. modest declines Housing Starts posted a seasonally adjusted annual rate of 1. The good news is Nov 06 987 there could be few that inventory is likely past its peak. The lower average 30-year mortgage low interest rates Oct 07 119. 2007:II 3. half of 2008 Employment Job creation was very weak in December. personal 2007:III 4.3 million cuts are unlikely historic lows.4% off that of November of 2006 and the Nov 07 647 declines already lowest level since the mid-1990s.250 rise measurably month supply. The good news: November’s employment figure was 12-month continue — revised upward to 115.000 net Dec 07 18 Job gains.3 Nov 06 6. Low mortgage rates are being influenced Nov 07 6. About 150.3 for the month. 2008. with 18. but sale at the end of November was at a 9. New Home Sales declined 9% in November to a seasonally adjusted annual Most of the big rate of 647. Growth in exports.2% below that of November 2006.3 million jobs sustained net job have been created. federal government spending.187 inventory pace in January 2006. and state and local government spending helped offset negative recession growth in residential fixed investment. The inventory of existing homes available for sale eased to a 10. private inventory investment. Freddie Mac. off from Rising wages and Nov 07 119. equipment and 2006:III 1.3 months supply.000 the near term and single-family home was $210.10%. and the Mortgage Bankers Association 13 .9% in the third quarter of 2007. affordability conditions are better compared to a affordability year ago. The unemployment rate ticked up to 5%. but is still near total 1. New home Looking even further back. Economic Monitor This table reflects data available through January 18.7.10% remain at near the housing boom in October 2005. NAR’s Housing Affordability Index stood at 119.0 million seasonally adjusted annualized units in November – a slight 0. Bureau of the Census. Wall Street is expecting Dec 06 6. the latest data represents a 48% decline from the Nov 07 1.200 – the first monthly price increase since Oct 07 4.8% 2008 but no residential structures. push up Nov 06 110.9% in the first half of consumption expenditures (PCE).