1. April 2010
Real Intelligence –
Real Advantages
In This Issue
Two fronts. By most measures, the economy is on the mend. Does that mean
housing is as well? In his commentary this month, NAR Chief Economist Lawrence Yun Table of Contents
says the answer depends on two potentially big support factors: Jobs and Confidence.
Read more. Real Estate Monitor 2
Economic Commentary:
Making sense of economic data. Lifestyle, family, and the enjoyment of owning Two Fronts 4
one’s own home are important considerations for consumers when deciding to purchase
U.S. Economic Forecast and
a home. Obviously buyers will look at price, availability and trends. But changes in the Outlook Table and Charts 6
economy – and potential changes as well – play a roll in a buyer’s decision. We’re bom-
barded daily with the latest economic data. What economic indicators are the most sig- In Focus:
nificant for real estate and for real estate professionals and their clients? Jed Smith, NAR’s Looking at Key Economic Data 8
Managing Director of Quantitative Research, gives us an overview. Read more. Using NAR Research:
Research Update 10
Keeping “up to date” with Research Update. Beginning in June, another a new Market Intelligence: Single
feature will make its debut in Real Estate Insights. Research Update will be a regular Women Homebuyers 11
column in this newsletter, and will provide information about developments in the
Links to Statistical Tables 13
real estate industry, current NAR Research studies, as well as links to other insightful
information. Meredith Dunn of NAR Research Communications provides a sneak peak Resources From NAR Research 14
at what you will find in Research Update. Read more.
Visit us on the web at
Single Women – A Significant Market. The most recent NAR Profile of Home
www.realtor.org/reinsights
Buyers and Sellers indicates that single women account for a significant share of home
buyers. Indeed, these home purchasers represent the second largest share of adult house-
There’s always more
holds who purchase homes. Research Economist Jessica Lautz takes a look at this market
“INSIGHT-”ful info.We
and how single female buyers differ from other home purchasers. Read more. will continue over the next
several months to upgrade
Pending home sales rose in February, showing a healthy gain from January as well and update Real Estate IN-
as from a year ago. NAR’s Pending Home Sales Index, a forward-looking indicator SIGHTS. In the meantime, remember to
based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly click on the special “For more info” arrow
icons throughout this issue. By clicking on
revised 90.2 in January, and was 17.3 percent above February 2009 when it was 83.2.
this icon when reading INSIGHTS, you can
All regions of the country posted year-over-year gains, and all regions except the West
automatically link to another web site for
registered monthly increases. Read more. more detailed information.

2. REAL ESTATE MONITOR
Likely Direction
Over the Next
Monthly Indicator Recent Figures Six Months Forecast
Existing-home sales eased 0.6% in February to Feb 2010 5,020 Declines in the
a seasonally adjusted annual rate of 5.02 million Jan 2010 5,050 immediate months after
units.Year over year, resales were up 7.0%.The Feb 2009 4,690 tax credit ends
national median home price for an existing home was
$165,100. At the end of the month, total housing inven-
tory was at an 8.6 month supply at the current sales pace.
New home sales also declined in February – by 2.2% – Feb 2010 308 Remaining largely at
to a seasonally adjusted annual rate of 308,000 units. New Jan 2010 315 suppressed levels until
sales were off 13.% from a year ago. While the inventory of Feb 2009 354 2011
new homes available for sale at the end of February was down
28% from February of 2009, the months supply was a 9.2 – a
3.4% increase from January.
Housing starts declined 5.9% in February to a season- Feb 2010 575 Inaccessibility of
ally adjusted annual rate of 575,000 units, but starts were Jan 2010 611 construction loans
up slightly – by 0.2% – from a year ago. Housing permits – Feb 2009 574 holding back full
generally a reliable indicator of future starts – were off 1.6%, but recovery
were up 11.3% from February of 2009.
Housing affordability remains at high levels. NAR’s Feb 2010 176.0 Modest decline from
Housing Affordability Index stood at 176.0 in February, Jan 2010 177.5 super high levels
down from January’s reading of 177.5. Increases in several Feb 2009 180.7
of the components of the index, including mortgage rates,
qualifying income, and a small month-to-month increase in the
median price of existing homes contributed to the decline.
Mortgage rates The average 30 year fixed rate mortgage Mar 2010 4.97% Recovering economy
decreased slightly – by 2 basis points – in March from Feb 2010 4.99% and high budget deficit
February to 4.97%. With still-historic low lending costs, Mar 2009 5.00% forces up rates
consumers scramble to secure low rates as many economists
expect a rate hike during the second half of the year. The aver-
age rate was at 5 percent in March of 2009.
Employment The economy created 162,000 jobs dur- Mar 2010 +162 Job creation momentum
ing March – the biggest job gain in three years. Adding Feb 2010 -14 appears intact
to payrolls in March were manufacturers, temporary 12-month
help services, the health care sector, and leisure and hospitality. total -2,320
The federal government also added 48,000 temporary Census
positions. But those newly created jobs had no impact on the
unemployment rate, which was unchanged at 9.7%.
Economic growth The economy grew at an annual rate 2009:IV +5.6% To expand but not
of 5.6% in the fourth quarter of 2009. Growth in the 2009:III +2.2% robustly as would
third quarter of last year was 2.2% and GDP registered a 2008:IV -5.4% normally happen post-
-5.4% growth rate in the fourth quarter of 2008. This is the third recession
estimate of GDP growth, based on more complete data, and is
off from the previous estimate of 5.9%. Increases in consumer
spending, exports, fixed investment and equipment and software
contributed to the growth.
Notes: All rates are seasonally adjusted. Existing home sales, new home sales and housing starts are shown in thousands. Employment growth is shown as month-to-month change in
thousands. Sources: NAR, Bureau of the Census, Bureau of Labor Statistics and Freddie Mac.This report reflects data as of April 2, 2010. Compiled by Wannasiri Chompoopet, Ken Fears
and Lawrence Yun.
2 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

3. NAR’S PENDING HOME SALES INDEx
Pending home sales rose in February. NAR’s pending home sales index rose 8.2% in
February to 97.6. February’s index was 17.3% ahead of the reading in February 2009.
On a year over year basis, the index rose in all four regions of the country. The Pending
Home Sales Index is a forward-looking indicator based on pending sales of existing
homes. A sale is listed as pending when the contract has been signed but the transac-
tion has not yet closed. Sales are usually finalized within one to two months of signing.
The index is based on a large national sample, typically representing about 20 percent
of transactions for existing-home sales. In developing the model for the index, it was
demonstrated that the level of monthly sales contract activity from 2001 through 2004
paralleled the level of closed existing-home sales in the following two months. Please
note there is a closer relationship between annual index changes (from the same
month a year earlier) and year-ago changes in sales performance than with month-to-
month comparisons. An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined, as well as the first of
five consecutive record years for existing-home sales. The improvement
in pending sales in February is another hopeful sign for housing, potential-
ly signaling a second surge of home sales in response to the home buyer
tax credit.
Pending Home Sales
(existing home sales lagged by 1-2 months)
7000 120
6000
100
5000
80
Pending Sales Index
4000
Thousands
60
3000
EHS PHS
40
2000
20
1000
0 0
Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan r Feb p
2009 2010
Source: NAR Research
EHS PHS
3 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®
6,800

4. ECONOMIC COMMENTARY
Two Fronts: Jobs and Confidence
by Lawrence Yun, NAR Chief Economist
Well, we may as well get ready for it.Yes, mortgage rates March’s job creation figure looks light in the aftermath of
continue at historic lows, averaging around the 5-percent 8 million brutal layoffs over the past two years, and it will take
mark recently. But rates are likely to rise. By December of some time to make up the difference. From April to the end of
this year, the average mortgage rate could be close to 6 2010, one million jobs could be added to the economy. Another
percent – perhaps as high at 6.5 percent. Why? The reasons two million could be in the offing next year. It may take four
for the increase are the macroeconomic forces of a recovering full years to fully recover all the job losses, but at least the
economy and a very high budget deficit. If the U.S. government darkest part of the job tunnel is behind us. Even the high-paying
has trouble borrowing and has to raise interest rates to attract but hard-hit manufacturing sector appears to have turned the
investors to purchase U.S. debt, then the rest of the private corner with 17,000 job gains. Surprisingly, the construction
sector will also pay higher interest rates. sector added jobs as well, despite very weak housing starts and
The good news from that somewhat sobering scenario is that a dearth of commercial construction. Infrastructure spending no
consumer price inflation will remain relatively benign and wage doubt is helping. Employment in rental-and-leasing also rose – by
growth tepid, keeping the lid on borrowing rates and preventing 1,800. Separately, and to gauge competition, NAR membership
in March was 1.063 million, little changed from the 1.068 million
one year ago, though down from the peak 1.4 million members
In March, we saw the first in 2007. Past patterns indicate that NAR membership rises from
meaningful job additions to the spring well into autumn, before a seasonal dip in winter.
economy in more than three Confidence
years as a net 162,000 new A second factor that will be important in supporting the
workers (payrolls) were added housing market is consumers’ views regarding home purchases.
to the economy. In the past three years, most metro markets experienced
successive price declines; rational consumers asked “why buy
now when I can buy later for less?” Renters have been staying
them from rising too high. I do not foresee the mortgage rate put for an average 19 months in recent times before making
going above 7 percent, at least for a prolonged period, in the a move versus the typical 14 months (this, according to a
next two years. Those engaged in the jumbo loan market or Wall Street Journal report). Census data suggests suppressed
commercial real estate will note that rates are already that household formation in the past two years – meaning more
high. But current high rates on jumbo and commercial real people living with roommates or with parents – and so not
estate loans are due to the lack of government guarantees. seeking their own housing.
As the financial market exhibits clear signs of stabilization and But with home prices showing signs of stabilization, the
as banks continue to build up their capital buffer, it is only a change in attitude towards home buying could be at hand.
matter of time before lenders start lending to non-government NAR’s median home price data in February indicated only a
backed sectors. So the underwriting standards for jumbo and slight decline from 12 months earlier, while the Case-Shiller
commercial real estate mortgages could become less stringent price index showed a modest price increase. This price
from improvements in the bank capital situation just as interest stabilization came about because home buyers responded to
rates on conventional and FHA mortgages begin to rise. the tax credit. There was a surge in home buying late last year
So, down the road we will have to face into the headwinds as the original tax credit deadline loomed. Pending home sales
of higher mortgage rates on conventional and FHA loans, as in February also stirred higher, hinting the beginning of a second
well as the expiration of the home buyer tax credit (which ends surge as the April deadline approaches. This forward momentum
in April for contract signings). Foreclosures also will remain will likely – perhaps definitively – signal the “bottoming out”
troubling, as they will surely be just as high this year as last year. of home prices in few months time. Only then will consumers
Is housing headed for more trouble or for a full recovery? The fully regain their confidence about home purchases. Of course,
answer depends on two potentially big support factors: Jobs and this home buying confidence is not directly observable, though
Confidence. we know it plays a big factor. A separate consumer confidence
index, based on several qualitative questions tallied by The
Jobs Conference Board, has not shown any notable improvement of
Potential home buyers (both first-timers and repeat buyers) late, however. This index stood 70.2 in March, about the same
who hold stable jobs respond to mortgage rate changes. But a level as the prior nine months, though much improved from
new cohort of stable job holders needs to be created in order late 2008 and early 2009 in the midst of the financial market
to sustain housing demand. In March, we saw the first meaningful crisis. (For more information about The Conference Board’s
job additions to the economy in more than three years as a net Consumer Confidence Index, see the In Focus column in this
162,000 new workers (payrolls) were added to the economy. issue of Real Estate INSIGHTS.)
4 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

5. Two Fronts: Jobs and Confidence
(continued)
Economy
The broader production economy has been doing quite well.
Steady economic growth of
GDP expanded robustly by 5.6 percent in the final quarter of 2009 near 3 percent this year and
following the 2.2 percent growth in the prior quarter.That’s the next year will accompany
good news.The somewhat bad news: the increased production job growth of about 2 million
came about with far fewer workers – i.e., fewer workers doing
more work. But with GDP growth expected to continue in 2010,
each year from 2011 – such
albeit not very robustly, the job creation momentum appears intact. job growth will boost existing
Business spending growth has been solid. International trade has home sales to 5.5 million in
picked up volume.The stimulus impact of government spending 2010 and to 5.7 million in 2011.
is also adding to production. But more importantly, the all-mighty
consumers are beginning to open up their wallets as they feel more
comfortable about their finances.
The baseline outlook is for steady economic growth of near experience of the then very high Reagan era deficits that
3 percent this year and in 2011. Note that GDP growth typically brought robust economic growth and huge job gains. But that
tends to be better than 5 percent in the immediate years was a time when foreigners had just started to finance a U.S.
following a recession, so the growth outlook can be considered budget deficit in a meaningful way. Today’s deficit is much larger
subdued. Balance sheet readjustments by both banks and than during the Reagan years and more dependent than ever on
consumers to put aside more for future rainy days will be one foreigners, particularly China, buying U.S. debt.
key reason holding back growth potential. Nonetheless, the near Let’s look back even further. England truly became an unmatched
3 percent GDP expansion will accompany job growth of about 2 superpower beginning at the time of Queen Elizabeth I. She was
million each year from 2011. Such job growth will boost existing guided by an economist named Gresham, who had no knowledge of
home sales to 5.5 million in 2010 and to 5.7 million in 2011. For Keynesian economics (Keynes would have to wait several centuries)
comparison, sales were 5.16 million last year and reached 7.1 but an abundance of every-day common sense. Gresham had this
million at the peak of the housing boom in 2005. simple advice: we need to bring the borrowing costs down and
strengthen Her Majesty’s currency.To achieve that meant balancing
Risks the books. Building a rainy day fund was even better.The Virgin
There are always risks to forecasts. Energy is one: big oil price Queen took his words of caution to heart. England invested in a navy
swings always put a monkey wrench in any economic forecast. For (for that rainy day) and Elizabeth did not build a single new palace
each $10 per barrel rise in oil prices, $80 billion is removed from during her long years of reign. Queen Marie Antoinette, across the
the economy, though oil-producing countries like Norway benefit channel and in a different era, was known for her frivolous spending
immensely. For perspective, oil prices have risen from an average habits. In fact, she had a nickname during her reign: Madame Deficit.
$60 a barrel in 2009 to $85 a barrel in early April 2010. France was facing ruinous budget problems, and while most of those
Another bigger risk – although with a smaller probability – relates were unrelated to Marie’s penchant for spending, the image of “out
to the budget deficit and some possibility of federal spending spiraling of control” spending added to the revolutionary fervor as the basic
out of control. Currently, both foreign and domestic investors needs of the French people were not being met.
justify the high deficit as necessary to boost the economy and to I know times have changed from those during Elizabethan
be manageable over time. Keynesian economics backs up that view: England and Revolutionary France. And the U.S. is neither of
go into deficit spending when private demand falters to pull the those nation states. President Obama will no doubt go down in
economy back on track.The recent enactment of truly historic health history as one of the most transformative leaders – for better or
care legislation will not bust the budget – in fact, it becomes a cost worse – primarily because of health-care reform. The debate on
saver over time – at least according to the Congressional Budget Office. that health care law continues, sometimes vehemently from both
But what if the CBO’s projections are way off the mark (which has sides. No American President will want to be labeled with Marie
happened on a few occasions).Then there could be some major Antoinette’s moniker. Only time will tell if President Obama’s
headaches ahead.An uncontrollable budget deficit will force interest health care legislation will go down in history as a monumental
rates up, perhaps significantly if, for instance, China rushes to the exit. success of lowering cost and enlarging coverage or a monumental
That would push the U.S. economy into another recession.Another failure of long queues and resentments and continuously climbing
recession would mean an even higher budget deficit as there will be budget deficits. Perhaps one day U.S. policies and programs will
fewer people working, thus smaller tax revenues. allow our nation to build comfortable rainy day reserves while
at the same time spend tax revenue on Americans to meet their
Amateur History basic needs. Easier said than done, of course. Which is why if it
Sometimes it is worth a look back into history for some were to ever happen, that President – whoever he or she may be
guidance and fun. “Deficits do not matter,” said former – will go down in history as one of the greatest ever.
Vice President Dick Cheney. Mr. Cheney was addressing the
5 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

6. Home Sales Mortgage Rates
Resales settling in the mid-5 million range after tax credit expires Increases ahead as economy continues to improve
10 8
New Home Sales
History Forecast New Home Sales History Forecast
Existing Home Sales
8 Existing Home Sales
6
Millions of Units
Quarter
6
percent
4
4
2
2 1-Year Adjustable Mortgage Rate
30-Year Fixed Mortgage Rates
0 2 3 4 1 2 3 4 1 2 3 4 12 3 4 1 2 3 4 1 2 34 1 2 3 4 1 2 0 2 3 4 1 2 3 4 1 2 3 4 1 2 34 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011
Sources: NAR, Bureau of the Census, NAR Forecast Sources: Freddie Mac, NAR Forecast
20042005 2006 2007 2008 2009 2010 2011 20042005 2006 2007 2008 2009 2010 2011
Housing Starts Economic Growth
Building activity improves in late 2010 and 2011 Steady, moderate growth
2500 8
Multi-Family Housing Starts History Forecast Multi-Family Housing Starts (thousand units)Forecast
History
Single Family Housing Starts
6
2000 Single Family Housing Starts (thousand units)
% GDP Growth (SAAR)
4
Quarter
2
Thousands
1500
0
1000
-2
-4
500
-6
0 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 12 3 4 1 2 3 4 1 2 -8 2 3 4 1 2 3 4 1 2 3 4 12 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011
Sources: Bureau of the Census, NAR Forecast Sources: Bureau of Economic Analysis, NAR Forecast
20042005 2006 2007 2008 2009 2010 2011
20042005 2006 2007 2008 2009 2010 2011
Unemployment Payroll Jobs
Remaining at high levels due to new workers who can’t find jobs Some positive news, but still far to go
12 1000
History Forecast
History Forecast GDP
500
10
Quarter
0
8
thousands
-500
percent
6
-1000
4
-1500
quarterly change
in payrolls (job gains)
2 -2000
0 2 3 4 1 2 3 4 1 2 3 4 12 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 -2500 2 3 4 1 2 3 4 1 2 3 4 12 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011
Source: Bureau of Labor Statistics, NAR forecast Source: Bureau of Labor Statistics, NAR forecast
20042005 2006 2007 2008 2009 2010 2011 20042005 2006 2007 2008 2009 2010 2011
6 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

7. U.S. Economic Outlook
April 2010
2009 2010 2011 2008 2009 2010 2011
I II III IV I II III IV I II
U.S. Economy
Annual Growth Rate
Real GDP -6.4 -0.7 2.2 5.6 2.4 1.6 2.4 2.2 2.8 3.5 0.4 -2.4 2.6 2.7
Nonfarm Payroll Employment -6.4 -5.0 -3.1 -1.3 0.0 0.8 0.9 0.9 0.9 1.6 -0.6 -4.3 -0.8 1.1
Consumer Prices -2.2 1.9 3.7 2.6 2.4 2.1 1.4 1.0 1.0 0.5 3.8 -0.3 2.3 1.1
Real Disposable Income 0.2 6.2 -3.6 1.0 -3.7 3.2 1.2 3.0 6.3 4.2 0.5 0.9 0.1 3.7
Consumer Confidence 30 48 52 51 52 55 56 59 62 66 58 45 56 66
Percent Unemployment 8.2 9.3 9.7 10.0 9.7 9.9 9.9 9.8 9.8 9.6 5.8 9.3 9.8 9.7
Interest Rates, Percent
Fed Funds Rate 0.2 0.2 0.2 0.1 0.2 0.2 0.3 0.8 1.2 1.8 1.9 0.2 0.4 1.9
3-Month T-Bill Rate 0.2 0.2 0.2 0.1 0.2 0.2 0.3 0.7 1.2 1.8 1.4 0.2 0.4 1.8
Prime Rate 3.3 3.3 3.3 3.3 3.2 3.3 3.3 3.6 4.0 4.5 5.1 3.3 3.4 4.9
Corporate Aaa Bond Yield 5.3 5.5 5.3 5.2 5.3 5.4 5.4 5.4 5.5 5.7 5.6 5.3 5.4 5.7
10-Year Government Bond 2.7 3.3 3.5 3.5 3.7 3.9 4.0 4.0 4.1 4.3 3.7 3.3 3.9 4.4
30-Year Government Bond 3.5 4.2 4.3 4.3 4.3 4.4 4.6 4.6 4.7 4.9 4.3 4.1 4.5 4.9
Mortgage Rates, percent
30-Year Fixed Rate 5.1 5.0 5.2 4.9 5.0 5.3 5.6 5.8 5.9 6.1 6.1 5.1 5.4 6.2
1-Year Adjustable 4.9 4.8 4.7 4.4 4.3 4.2 4.3 4.6 4.8 4.9 5.2 4.7 4.4 5.0
Housing Indicators
Thousands
Existing Home Sales* 4,610 4,780 5,280 5,970 5,145 5,810 5,320 5,618 5,507 5,569 4,913 5,156 5493 5,699
New Single-Family Sales 338 372 406 370 333 342 370 456 552 609 485 374 377 591
Housing Starts 528 540 587 559 579 590 594 713 871 970 904 553 619 1,013
Single-Family Units 358 425 498 481 489 488 493 570 690 761 622 441 510 802
Multifamily Units 169 115 88 77 90 101 101 143 181 209 282 113 109 211
Residential Construction** 368 344 360 363 357 359 361 373 403 437 451 359 363 451
Percent Change – Year Ago
Existing Home Sales -6.8 -2.8 5.7 26.7 11.6 21.6 0.8 -5.9 7.1 -4.2 -13.1 4.9 6.5 3.7
New Single-Family Sales -40.1 -27.1 -11.7 -5.4 -1.6 -8.1 -8.9 23.2 66.0 78.1 -37.5 -22.8 0.6 56.9
Housing Starts -50.2 -46.9 -32.4 -15.1 9.6 9.2 1.3 27.5 50.6 64.6 -33.3 -38.8 11.8 63.7
Single-Family Units -51.2 -36.6 -16.6 4.3 36.5 14.9 -1.0 18.4 41.1 55.8 -40.5 -29.1 15.7 57.2
Multifamily Units -47.8 -66.8 -67.3 -60.7 -47.1 -12.1 14.4 84.6 102.0 106.9 -8.7 -60.1 -3.5 94.1
Residential Construction -23.9 -25.6 -18.9 -12.5 -3.0 4.1 0.4 2.8 12.9 21.9 -0.6 -20.5 1.1 24.4
Median Home Prices
Thousands of Dollars
Existing Home Prices 167.6 174.4 178.1 170.8 165.9 177.2 184.5 177.8 172.9 184.8 198.1 172.5 177.2 184.8
New Home Prices 207.8 218.7 212.6 217.7 214.9 223.5 220.3 226.8 224.5 234.2 232.1 215.9 221.7 233.1
Percent Change – Year Ago
Existing Home Prices -15.6 -16.2 -11.6 -5.5 -1.0 1.6 3.6 4.1 4.2 4.3 -9.5 -12.9 2.7 4.3
New Home Prices -11.8 -7.6 -6.7 -1.7 3.4 2.2 3.6 4.2 4.5 4.8 -6.4 -7.0 2.7 5.1
Housing Affordability Index 181 174 161 171 178 158 143 143 146 130 139 172 154 129
Quarterly figures are seasonally adjusted annual rates.
* Existing home sales of single-family homes and condo/co-ops; ** billion dollars
7 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

8. IN FOCUS
Looking at Key Economic Data:
Numbers, Forecasts, and the Housing Outlook
by Jed Smith, Managing Director, Quantitative Research
As we emerge from the Great Reces- Consumer Confidence and Home Sales
sion we are bombarded with economic
commentary on a daily basis. In the recent 7500 120
past the economy has experienced a signifi- Exis
7000 Con
cant number of problems: 100
Consumer Confidence Index
6500
n Jobs.The economy has shed over 8
Existing-home sales
6000 80
million jobs between late 2007 (the
thousands
5500
beginning of the recession) and the 60
present. At the same time, the economy 5000
needs to create 1.4 million jobs per year 4500 40
to accommodate new workers entering Consumer Confidence Index (1985 = 100)
4000
the workforce. Existing-home Sales (SAAR)
20
n Decreases in wealth.The Great Reces- 3500
sion took a toll on household and 3000 0
Jan Jan Jan Jan Jan Jan Jan Jan Jan
nonprofit wealth. According to the 2002 2003 2004 2005 2006 2007 2008 2009 2010
Federal Reserve, overall household/non- Sources: The Conference Board, NAR Research, Haver Analytics
profit wealth declined by $11.7 trillion
in late 2009 from its peak in 2007, in an
economy with a total output (that is,
well as new constructions. Consequently, employment trends – changes in em-
Gross Domestic Product or GDP) of
many clients may ask: “Where is the Econo- ployment, the outlook for employment,
$14.5 trillion.
my Headed?” and stability of employment -- appear
n Home sales. Existing-home sales
How do we understand where the to be strong indicators for the housing
declined from approximately 7 million
economy is going when there are so many outlook. As of the first quarter of 2010,
units to 5 million sales per year. During
economic numbers and concepts men- there were 14.9 million people unem-
the same time, new home construc-
tioned on a continuing basis? And for real ployed. But the good news – the latest
tion dropped from a rate of 2.3 million
estate professionals, the question is likely to jobs figures indicate that the economy
single family homes per year to 575,000
be: “What do the economic numbers mean generated 162,000 new jobs in March,
homes. Given that an existing home sale
for our business and our clients?” and the unemployment rate
pulls through an additional $57,000 of
remained steady at 9.7 percent.
additional GDP spending, the declines in Where is the Economy Headed? 2. Interest Rates: A quarter of a
home sales and construction have had a A Look at Economic Data percent change in the interest rate can
major economic impact. There is no dearth of economic data; mean tens of thousands of dollars in
n The “shadow banking” system. Leh- indeed, there’s tons of it out there. Monthly costs over a thirty-year mortgage. An
man, General Electric Credit Corpora- and quarterly data on consumption, invest- increase from 5-6 percent on a thirty
tion, AIG, Bear Stearns, among others ment, exports, imports, Gross Domestic year $200,000 loan can change the
crashed in October 2007, causing major Product (GDP), employment, interest rates, monthly payment of principal and inter-
credit availability problems. housing construction, housing sales, con- est by $125, an increase of 11.6 percent.
n GDP growth turned negative during the sumer and producer prices, manufactur- Interest rates – along with home prices
Great Recession, and has been some- ing, demographic data, and a wide variety – can have a major impact on housing
what weaker than would normally oc- of other economic statistics are readily affordability. In the first quarter of 2010
cur during emergence from a recession. available.What data are relevant to REAL- rates were near 5 percent and are ex-
TORS® and their clients? pected to remain reasonable, although
Lifestyle, family, and ownership enjoy- There are five major data “releases” with some increases as the economy
ment are clearly important considerations of particular interest that can give a good continues to improve.
in the purchase of a new home.The client overview of the economy, as well as signs 3. Consumer Mood: Every month The
will be focused on the local housing market about the future direction of housing. Conference Board reports its survey of
in terms of price, availability, and trends.
consumer confidence – an overall sum-
But changes in the economy – and perhaps 1. Employment: If people don’t have mation of how people feel about the
more importantly, consumers’ views of jobs, they are unlikely to buy homes. current state of the economy. Changes
the economy – can impact the outlook for They’re also likely to cut back on other, in consumer confidence tend to reflect
both residential and commercial sales as non-essential expenditures. Data on future changes in the economy. In 2007
8 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

9. Looking at Key Economic Data
Numbers, Forecasts, and the Housing Outlook
(continued)
consumer mood averaged at 103, drop- homes available for sale), just to mention
ping to 25 in February of 2009. A read- two. And remember – all real estate is local.
ing in the 90 to 100 range would signify National trends may not be those reflected
an economy headed to full employment. in local markets.This makes the role of a
Currently, the data have shown some local real estate professional even more
upward movement but tend to suggest vital to property buyers and sellers.
a slow but positive recovery. The home purchase decision is about
4. Gross Domestic Product (GDP): lifestyle, family, hopes, and the future. How-
GDP is a measure of the overall ever, the economic side is clearly important.
economic output, and stood at $14.5 An overview of the numbers can provide
trillion in the final quarter of 2009. the basis for addressing clients’ questions
Economic growth is forecast to increase about the real estate outlook – that is,
in the neighborhood of 3 percent per where the economy has been, where it is
year—somewhat slower than one headed, and current prices and sales.
would expect when exiting a recession,
but consistent with long-term trends.
5. Existing-home Sales: NAR data
on existing-home sales are released
monthly, and quarterly reports are
issued on resales by state. (Recent
and historical data are available
at www.realtor.org/research/
ehspage.)
Interpreting the Data :What Does It
Mean for REALTORS®?
Changes in the economy affect the
housing markets and also the ways in which
real estate professionals can market their
property listings and manage their business.
For example, there is a match—not perfect
but certainly illustrative, between Consum-
er Confidence and Existing Home Sales.
Currently, we expect Consumer Confi-
dence to keep on improving as both the
economy continues to grow and (hopeful-
ly) the job market remains on an upswing.
Such improving consumer sentiment bodes
well for home sales going forward.
However, the myriad of information is
overwhelming. NAR provides an overall
economic forecast plus a summary of
important data items: A one page summary
and forecast of economic indicators
can be found at www.real-
tor.org/research.
The five major types of data
(and changes in the data) are useful in sum-
marizing the economy and the direction of
the real estate markets. Of course, there is
a lot more data out there: average weekly
earnings, home inventory (the number of
9 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

10. USING NAR RESEARCH
Research Update – Staying in Touch with the Latest
from NAR Research
by Meredith Dunn, Research Communications Representative
NAR Research keeps you up to date News You Can Use
Useful Info
on the latest statistics and analysis from New: Relocation Reports
NAR’s Research Division. Beginning in These reports pinpoint which coun-
June, we will premiere a new feature in ties relocation clients are coming from Research Store
Real Estate Insights. Research Update and going to, along with relative income Research Product Store
will be a regular column in this newslet- information. Relocation Reports are Commercial Real Estate
ter, which will provide information about available for all counties in the U.S. and
Commercial Outlook
developments in the real estate industry, can now be downloaded online, for FREE.
current NAR Research studies, as well Reports by Topic
as links to other insightful information. Economists’ Podcast: Latest Housing Data Find the Research You Want
What will you find in Research Update? and the Economy Real Estate Insights
Here’s a look. On the second Tuesday of every Commentaries, Forecasts and Articles
month, NAR’s Chief Economist, Law- NAR News Releases
Latest Developments rence Yun, will discuss the current factors,
News Releases
Research Webinar for April: issues, and data affecting REALTORS® and
Homebuyers and Sellers: A their businesses. Get a wealth of infor- Contact Research Staff
Demographic Look mation straight from the source with a Directory
You know the overall home buyer quick listen – each podcast is around 5
and seller statistics, but this webinar will minutes long and provides a timely mar-
dive deeper into the statistics to describe ket update. In this podcast, Chief
demographic differences. How do single Economist Lawrence Yun discusses the
female buyers differ from single males mixed messages on the economy that Another Valuable Tool from NAR
or married couples? How do different the latest housing data provides. Listen Research
age groups and household composition to the latest Podcast Research Update is a great destination
change the way buyers finance and look to get the “headlines” from NAR Re-
for homes? All these questions and more Research is Now on Face- search. And you can use the information
will be answered during this webinar, book, Active Rain, RealTown, from Update in your own newsletters,
which is scheduled for April 28 and Twitter! marketing materials, and presentations.
at 2pm EDT. Register now. The National Association of REAL- But you don’t have to wait until June. For
TORS® has been surveying members to more information about Research Update,
Multifamily Fundamentals find out about their use of technology visit www.realtor.org/research/re-
The economy concluded 2009 with like websites and blogs for several years. searchupdatearchives.
a positive level of activity. Gross domes- Now, Research, too, has its very own Fa-
tic product advanced at a 5.6 percent cebook group, Active Rain and RealTown
rate. Other economic indicators also presences, as well as a presence on Twit-
pointed towards a continued recovery. ter. Research’s social media pages are not
At the same time, commercial real estate only a place for our members to receive
concluded the year with mixed results. insight into our latest surveys, commen-
Fundamentals remained weak, invest- taries and reports, but also an avenue for
ments were down and the volume of dis- you to make your thoughts known to us
tressed properties increased. Contracting and your fellow REALTORS®. There may
credit and a tightened lending environ- be certain special trends in the market-
ment added to the pressure. In the broad place that Research may be unaware of
landscape of commercial properties, the – such as a significant rise in foot traffic
multifamily sector has fared comparative- at open houses or continuing long delays
ly better. Demand for space was mod- in getting short sales to close. This is an
est but positive. Net absorption closed open forum for discussion rather than a
the year at 105,458 units.Yet, there are one-sided monologue.
factors which caused adverse impacts in
the sector. View the Commercial
Real Estate Outlook
10 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

11. MARKET INTELLIGENCE
Single-Women Home Buyers: A Growing Segment
By Jessica Lautz, Research Economist
In the summer of 2009, NAR Re- Single Women Home Buyers
search surveyed recent home buyers (as a percent of all home buyers)*
about their experience with the home
search process, and the use of real 25
estate professionals in purchas-
ing a home. The results of 22
20 21 21 21
the survey were published in 20 20
NAR’s 2009 Profile of Home 18
Buyers and Sellers.
percent
15
15
Results of that survey show that
a significant share of home buyers are
10
single women. Indeed, the percentage
of single-women buyers has increased
from 14 percent in 1995 to 21 percent 5
in 2009. These home purchasers account
for the second largest share of adult 0
households who purchase homes. Single 2001 2003 2004** 2005 2006 2007 2008 2009
females make up one-quarter of the first- *buyers who purchased homes between July 2008 and June 2009
**beginning in 2003, NAR’s survey of home buyers and sellers was conducted annually
time buyer population and 17 percent Source: The 2009 NAR Profile of Home Buyers and Sellers
of the repeat buyer population. We look
at some results below from the most What They Buy but it is even more true of single female
recent Profile to get a better description While the majority of single female buyers. Nearly half of single female buy-
of who single women buyers are. buyers purchase a single-family home, ers purchase a home because they have a
single female households are more likely desire to own a home. The second most
Single Female Home Buyers than other household types to purchase cited reason for single female buyers in
The median age of all home buyers an apartment/condominium or a town- choosing to purchase a home is a change
was 39 years old, compared to 41 for house/rowhouse. One in four single in family situation—13 percent of single
single female buyers. Among single-female female buyers purchase a house in an female buyers purchase for this reason,
buyers, 58 percent were first-time home urban area/central city, which is a higher compared to 9 percent of all buyers.
buyers in 2009, compared to 47 percent percentage compared to all other house- In comparison to other household
of all home buyers. The median house- hold compositions except single males. types, single female buyers are more
hold income for single-women home Still, the majority of single female home likely to have lived with parents, rela-
buyers was lower than that of all other buyers purchase a home in the suburbs, tives or friends before buying their own
homebuyer household types. Single similar to all buyers. residence, 20 percent compared to
females reported a median household Single female buyers are more likely to 12 percent of all buyers. Single female
income of $47,900 in 2008 compared purchase an existing home than are other buyers are also more likely to rent an
to $73,100 among all home buying buyers.This makes the role of a real estate apartment or house before buying their
households. This difference in house- professional even more important to single own place compared to all buyers. Both
hold income should not be completely female buyers. Only 14 percent of single previous living situations are related to
surprising as 68 percent of home buying female buyers purchased a new home the large share of single female buyers
households are couples – and so perhaps compared to 18 percent of all buyers. being first-time buyers.
likely to have two income earners. The Single female buyers also tend to purchase
difference in median income for single smaller homes, typically buying homes that Real Estate Professionals and the
women households compared to those are 1,480 square feet in size compared Home Search
for single men is less striking—single to the median size of 1,800 square feet When single female buyers first start
men typically made $53,700 in 2008. Ad- purchased among all buyers. Once single to look for a home they contacted a
ditionally, single women households are females found the home they purchased, real estate agent, contacted a mortgage
less likely to have children living at home they expect to live there for 10 years. broker or talked with a friend or relative
than couples. Results from the survey more frequently than did other buy-
show that 22 percent of single women Why They Buy ers. While 87 percent of single females
home buyers have children at home, More than one-third of all home buy- use the Internet in their home search, a
while 38 percent of all home buyers have ers buy a home for the desire to own. slightly larger percentage – 89 percent --
children at home. This has been the most cited reason use a real estate agent. Real estate agents
consistently for the last several years, are a trusted resource that single female
11 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

12. Single-Women Home Buyers: A Growing Segment
(continued)
buyers turn to during their home search. Primary Reason for Purchasing a Home
A larger share of single female home buy- (Percentage Distribution)
ers first find the home they purchased
from their agent compared to all buyers All Single-Female
– 40 percent vs. 36 percent, respectively. Buyers Buyers
Underscoring the importance of the real Desire to own a home 35 % 47 %
estate agent to single women buyers Job-related relocation or move 9 3
is the fact that a higher share of single Desire for larger home 9 3
females purchased their home through a
Change in family situation 9 13
real estate agent than through any other
source: 79 percent compared to 77 per- Affordability of homes 8 8
cent of all buyers. Desire for a home in a better area 4 2
Single women buyers, like all other Desire to be closer to family/friends/relatives 4 4
buyers, most want their agent to help Desire to be closer to job/school/transit 3 2
them find the right home to purchase, Source: The 2009 NAR Profile of Home Buyers and Sellers
but they place more importance than detail may not add to 100 due to rounding
other buyers on their agent helping them
negotiate the terms of sale. Similar to all
buyers, single women place a high impor-
tance on honesty and integrity in their
What it Means for Real Estate Pro-
agent and knowledge of the purchase fessionals
process. Single women are likely to continue to
be a significant segment of home buyers.
Home Financing
By utilizing the information above as a
Single female buyers are similar to all
helpful tool, as well as other informa-
buyers when it comes to financing their
tion found in the 2009 NAR Profile of
home purchase. However, there are some
Home Buyers and Sellers, real estate
differences. Similar to all buyers, about
professionals may be able to under-
nine in ten finance their home purchase
stand and serve their clients better. This
through a mortgage, and the majority use
diligence will be rewarded: single females
savings as the source of their down pay-
are more likely than other buyers to
ment. A higher share of single female buy-
turn to real estate agents first and stay
ers receive a gift from a friend or relative
with the real estate agent throughout the
as a down payment source compared
purchasing process.
to other buyers, and a smaller share use
proceeds from the sale of their primary
residence.
Despite record high housing afford-
ability conditions, buyers are still making
sacrifices to purchase homes and this
is also the case for female home buy-
ers. Single females are more likely than
other buyers to have cut spending on
luxury items, entertainment, and clothes
in order to be able to purchase a home.
Nearly nine in ten single females believe
their home was a good financial invest-
ment.
12 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

13. LINKS TO STATISTICAL DATA AND NAR RESEARCH RESOURCES
Residential Housing Market Data: Monthly Series
n Pending Home Sales
n Existing Home Sales
n Median Sales Prices
n Housing Affordability Index
Residential Housing Market Data: Quarterly Series
n Existing Home Sales by State
n Metropolitan Area Median Sales Prices
n Housing Affordability Index (quarterly and first-time homebuyer)
Commercial Market Data and Reports
n Commercial Real Estate Forecast (quarterly)
n Commercial Real Estate Outlook (quarterly)
n Commercial Real Estate Leading Indicator (quarterly)
n 2009 NAR Commercial Member Profile
n Commercial Real Estate Market Survey
Web Exclusives
n Daily commentary
n Multimedia
n Webinars and Podcasts
n Facebook
13 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®

14. RESOURCES FROM NAR RESEARCH
NAR’s 2010 Midyear Meetings
While attending NAR’s Midyear Meeting in May, be sure to take
advantage of these informative sessions from NAR Research –
Economic Issues & Residential Real Estate Economic Issues & Commercial
Business Trends Forum Business Trends Forum
05/13/2010 | 08:00 AM - 10:00 AM 05/13/2010 | 1:00 PM - 3:00 PM
The U.S. Housing Market: Is Recovery In Sight? NAR Chief Lawrence Yun, NAR Chief Economist will be joined by Ajay
Economist Lawrence Yun will be joined by Mark Zandi, Chief Rajadhyaksha of Barclays Capital and Brendan Reilly from the
Economist and Founder of Moody’s Economy.com. These Commercial Mortgage Securities Association in a discussion of
nationally recognized experts will offer insights, perspectives and the economic recovery, developments in the capital markets and
forecasts regarding residential real estate and the economy, the the implications of financial changes for commercial real estate
future of the U.S. mortgage finance delivery system, and the role in 2010 and beyond.
of the federal government in the operation of mortgage finance.
Following Drs.Yun and Zandi, learn how you can share their
insights with your coworkers and clients. Leading marketing For locations of these informative sessions, check your Midyear
and training experts Amy Chorew of The Tech Byte and Ginger Conference program. For more information about the meetings,
Wilcox from the Social Media Marketing Institute, will discuss visit www.realtor.org/midyear.nsf/pages/expo.
the best practices to utilize NAR research and statistics in your
social media marketing campaign.
14 Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®