In This IssueTwo 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 says the answer depends on two potentially big support factors: Jobs and Confidence. Read more.

Making sense of economic data. Lifestyle, family, and the enjoyment of owning one’s own home are important considerations for consumers when deciding to purchase a home. Obviously buyers will look at price, availability and trends. But changes in the 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-nificant for real estate and for real estate professionals and their clients? Jed Smith, NAR’s Managing Director of Quantitative Research, gives us an overview. Read more.

Keeping “up to date” with Research Update. Beginning in June, another a new feature will make its debut in Real Estate Insights. Research Update will be a regular column in this newsletter, and will provide information about developments in the 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 at what you will find in Research Update. Read more.

Single Women – A Significant Market. The most recent NAR Profile of Home 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-holds who purchase homes. Research Economist Jessica Lautz takes a look at this market and how single female buyers differ from other home purchasers. Read more.

Pending home sales rose in February, showing a healthy gain from January as well as from a year ago. NAR’s Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and was 17.3 percent above February 2009 when it was 83.2. All regions of the country posted year-over-year gains, and all regions except the West registered monthly increases. Read more.

April 2010

Real Intelligence – Real Advantages

Table of Contents

Real Estate Monitor 2

Economic Commentary: Two Fronts 4

U.S. Economic Forecast and Outlook Table and Charts 6

In Focus: Looking at Key Economic Data 8

Using NAR Research: Research Update 10

Market Intelligence: Single Women Homebuyers 11

Links to Statistical Tables 13

Resources From NAR Research 14

Visit us on the web at www.realtor.org/reinsights

There’s always more “INSIGHT-”ful info. We will continue over the next

several months to upgrade and update Real Estate IN-

SIGHTS. In the meantime, remember to click on the special “For more info” arrow icons throughout this issue. By clicking on this icon when reading INSIGHTS, you can automatically link to another web site for more detailed information.

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®2

Existing-home sales eased 0.6% in February to a seasonally adjusted annual rate of 5.02 million units. Year over year, resales were up 7.0%. The

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% – to a seasonally adjusted annual rate of 308,000 units. New sales were off 13.% from a year ago. While the inventory of

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-ally adjusted annual rate of 575,000 units, but starts were up slightly – by 0.2% – from a year ago. Housing permits –

generally a reliable indicator of future starts – were off 1.6%, but were up 11.3% from February of 2009.

Housing affordability remains at high levels. NAR’s Housing Affordability Index stood at 176.0 in February, down from January’s reading of 177.5. Increases in several

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 decreased slightly – by 2 basis points – in March from February to 4.97%. With still-historic low lending costs,

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-ing March – the biggest job gain in three years. Adding to payrolls in March were manufacturers, temporary

help services, the health care sector, and leisure and hospitality. 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 of 5.6% in the fourth quarter of 2009. Growth in the third quarter of last year was 2.2% and GDP registered a

-5.4% growth rate in the fourth quarter of 2008. This is the third 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.

Monthly Indicator Recent Figures Forecast

Likely Direction Over the Next Six Months

Feb 2010 5,020Jan 2010 5,050Feb 2009 4,690

Feb 2010 308Jan 2010 315Feb 2009 354

Feb 2010 575Jan 2010 611Feb 2009 574

Feb 2010 176.0Jan 2010 177.5Feb 2009 180.7

Mar 2010 4.97% Feb 2010 4.99% Mar 2009 5.00%

Mar 2010 +162Feb 2010 -1412-month total -2,320

2009:IV +5.6%2009:III +2.2%2008:IV -5.4%

Declines in the immediate months after tax credit ends

Remaining largely at suppressed levels until 2011

Inaccessibility of construction loans holding back full recovery

Modest decline from super high levels

Recovering economy and high budget deficit forces up rates

Job creation momentum appears intact

To expand but not robustly as would normally happen post-recession

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.

REAL ESTATE MONITOR

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®3

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.

0

1000

2000

3000

4000

5000

6000

7000

EHS

Feb pJan rDecNovOct Sept Aug Jul Jun May Apr Mar Feb

0

20

40

60

80

100

120

PHS

2010

Tho

usan

ds

Pending Sales Index

2009

5,800

6,000

6,200

6,400

6,600

6,800

5,600

EHS PHS

Source: NAR Research

Pending Home Sales(existing home sales lagged by 1-2 months)

NAR’S PENDING HOME SALES INDEx

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®4

Well, we may as well get ready for it. Yes, mortgage rates continue at historic lows, averaging around the 5-percent mark recently. But rates are likely to rise. By December of this year, the average mortgage rate could be close to 6 percent – perhaps as high at 6.5 percent. Why? The reasons for the increase are the macroeconomic forces of a recovering economy and a very high budget deficit. If the U.S. government has trouble borrowing and has to raise interest rates to attract investors to purchase U.S. debt, then the rest of the private sector will also pay higher interest rates.

The good news from that somewhat sobering scenario is that consumer price inflation will remain relatively benign and wage growth tepid, keeping the lid on borrowing rates and preventing

them from rising too high. I do not foresee the mortgage rate going above 7 percent, at least for a prolonged period, in the next two years. Those engaged in the jumbo loan market or commercial real estate will note that rates are already that high. But current high rates on jumbo and commercial real estate loans are due to the lack of government guarantees. As the financial market exhibits clear signs of stabilization and as banks continue to build up their capital buffer, it is only a matter of time before lenders start lending to non-government backed sectors. So the underwriting standards for jumbo and commercial real estate mortgages could become less stringent from improvements in the bank capital situation just as interest rates on conventional and FHA mortgages begin to rise.

So, down the road we will have to face into the headwinds of higher mortgage rates on conventional and FHA loans, as well as the expiration of the home buyer tax credit (which ends in April for contract signings). Foreclosures also will remain troubling, as they will surely be just as high this year as last year. Is housing headed for more trouble or for a full recovery? The answer depends on two potentially big support factors: Jobs and Confidence.

JobsPotential home buyers (both first-timers and repeat buyers)

who hold stable jobs respond to mortgage rate changes. But a new cohort of stable job holders needs to be created in order to sustain housing demand. In March, we saw the first meaningful job additions to the economy in more than three years as a net 162,000 new workers (payrolls) were added to the economy.

Two Fronts: Jobs and Confidence by Lawrence Yun, NAR Chief Economist

March’s job creation figure looks light in the aftermath of 8 million brutal layoffs over the past two years, and it will take some time to make up the difference. From April to the end of 2010, one million jobs could be added to the economy. Another two million could be in the offing next year. It may take four full years to fully recover all the job losses, but at least the darkest part of the job tunnel is behind us. Even the high-paying but hard-hit manufacturing sector appears to have turned the corner with 17,000 job gains. Surprisingly, the construction sector added jobs as well, despite very weak housing starts and a dearth of commercial construction. Infrastructure spending no doubt is helping. Employment in rental-and-leasing also rose – by 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 2007. Past patterns indicate that NAR membership rises from spring well into autumn, before a seasonal dip in winter.

ConfidenceA second factor that will be important in supporting the

housing market is consumers’ views regarding home purchases. 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 put for an average 19 months in recent times before making a move versus the typical 14 months (this, according to a Wall Street Journal report). Census data suggests suppressed household formation in the past two years – meaning more people living with roommates or with parents – and so not seeking their own housing.

But with home prices showing signs of stabilization, the change in attitude towards home buying could be at hand. NAR’s median home price data in February indicated only a slight decline from 12 months earlier, while the Case-Shiller price index showed a modest price increase. This price stabilization came about because home buyers responded to the tax credit. There was a surge in home buying late last year as the original tax credit deadline loomed. Pending home sales in February also stirred higher, hinting the beginning of a second surge as the April deadline approaches. This forward momentum will likely – perhaps definitively – signal the “bottoming out” of home prices in few months time. Only then will consumers fully regain their confidence about home purchases. Of course, this home buying confidence is not directly observable, though we know it plays a big factor. A separate consumer confidence index, based on several qualitative questions tallied by The Conference Board, has not shown any notable improvement of late, however. This index stood 70.2 in March, about the same level as the prior nine months, though much improved from late 2008 and early 2009 in the midst of the financial market crisis. (For more information about The Conference Board’s Consumer Confidence Index, see the In Focus column in this issue of Real Estate INSIGHTS.)

In March, we saw the first meaningful job additions to the economy in more than three years as a net 162,000 new workers (payrolls) were added to the economy.

ECONOMIC COMMENTARY

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®5

Two Fronts: Jobs and Confidence (continued)

EconomyThe broader production economy has been doing quite well.

GDP expanded robustly by 5.6 percent in the final quarter of 2009 following the 2.2 percent growth in the prior quarter. That’s the good news. The somewhat bad news: the increased production came about with far fewer workers – i.e., fewer workers doing more work. But with GDP growth expected to continue in 2010, albeit not very robustly, the job creation momentum appears intact. Business spending growth has been solid. International trade has picked up volume. The stimulus impact of government spending 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 3 percent this year and in 2011. Note that GDP growth typically tends to be better than 5 percent in the immediate years following a recession, so the growth outlook can be considered subdued. Balance sheet readjustments by both banks and consumers to put aside more for future rainy days will be one key reason holding back growth potential. Nonetheless, the near 3 percent GDP expansion will accompany job growth of about 2 million each year from 2011. Such job growth will boost existing home sales to 5.5 million in 2010 and to 5.7 million in 2011. For comparison, sales were 5.16 million last year and reached 7.1 million at the peak of the housing boom in 2005.

RisksThere are always risks to forecasts. Energy is one: big oil price

swings always put a monkey wrench in any economic forecast. For each $10 per barrel rise in oil prices, $80 billion is removed from the economy, though oil-producing countries like Norway benefit immensely. For perspective, oil prices have risen from an average $60 a barrel in 2009 to $85 a barrel in early April 2010.

Another bigger risk – although with a smaller probability – relates to the budget deficit and some possibility of federal spending spiraling out of control. Currently, both foreign and domestic investors justify the high deficit as necessary to boost the economy and to be manageable over time. Keynesian economics backs up that view: go into deficit spending when private demand falters to pull the economy back on track. The recent enactment of truly historic health care legislation will not bust the budget – in fact, it becomes a cost saver over time – at least according to the Congressional Budget Office. But what if the CBO’s projections are way off the mark (which has happened on a few occasions). Then there could be some major headaches ahead. An uncontrollable budget deficit will force interest rates up, perhaps significantly if, for instance, China rushes to the exit. That would push the U.S. economy into another recession. Another recession would mean an even higher budget deficit as there will be fewer people working, thus smaller tax revenues.

Amateur HistorySometimes it is worth a look back into history for some

guidance and fun. “Deficits do not matter,” said former Vice President Dick Cheney. Mr. Cheney was addressing the

Steady economic growth of near 3 percent this year and next year will accompany job growth of about 2 million each year from 2011 – such job growth will boost existing home sales to 5.5 million in 2010 and to 5.7 million in 2011.

experience of the then very high Reagan era deficits that brought robust economic growth and huge job gains. But that was a time when foreigners had just started to finance a U.S. budget deficit in a meaningful way. Today’s deficit is much larger than during the Reagan years and more dependent than ever on foreigners, particularly China, buying U.S. debt.

Let’s look back even further. England truly became an unmatched superpower beginning at the time of Queen Elizabeth I. She was guided by an economist named Gresham, who had no knowledge of Keynesian economics (Keynes would have to wait several centuries) but an abundance of every-day common sense. Gresham had this simple advice: we need to bring the borrowing costs down and strengthen Her Majesty’s currency. To achieve that meant balancing the books. Building a rainy day fund was even better. The Virgin Queen took his words of caution to heart. England invested in a navy (for that rainy day) and Elizabeth did not build a single new palace during her long years of reign. Queen Marie Antoinette, across the channel and in a different era, was known for her frivolous spending habits. In fact, she had a nickname during her reign: Madame Deficit. France was facing ruinous budget problems, and while most of those were unrelated to Marie’s penchant for spending, the image of “out of control” spending added to the revolutionary fervor as the basic needs of the French people were not being met.

I know times have changed from those during Elizabethan England and Revolutionary France. And the U.S. is neither of those nation states. President Obama will no doubt go down in history as one of the most transformative leaders – for better or worse – primarily because of health-care reform. The debate on that health care law continues, sometimes vehemently from both sides. No American President will want to be labeled with Marie Antoinette’s moniker. Only time will tell if President Obama’s health care legislation will go down in history as a monumental success of lowering cost and enlarging coverage or a monumental failure of long queues and resentments and continuously climbing budget deficits. Perhaps one day U.S. policies and programs will allow our nation to build comfortable rainy day reserves while at the same time spend tax revenue on Americans to meet their basic needs. Easier said than done, of course. Which is why if it were to ever happen, that President – whoever he or she may be – will go down in history as one of the greatest ever.

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®6

0

2

4

6

81-Year Adjustable Mortgage Rate

30-Year Fixed Mortgage Rates

Quarter

20112010200920082007200620052004

1-Year Adjustable Mortgage Rate 30-Year Fixed Mortgage Rates

History Forecast

2006200520044 3 42 3 4 1 2 3 4 1 2 3 4 1

20072 3 4

perc

ent

1 22008

3 120092 3 4 1 2

20101 22011

New Home Sales

Existing Home Sales

Quarter

20112010200920082007200620052004

New Home Sales Existing Home Sales

History Forecast

0

2

4

6

8

10

2006200520043 42 3 4 1 2 3 4 1 2 3 4 1

2007

Mill

ions

of U

nits

2 3 4 1 22008

3 4 120092 3 4 1 2

20101 2

2011

Sources: NAR, Bureau of the Census, NAR Forecast

Home SalesResales settling in the mid-5 million range after tax credit expires

Sources: Freddie Mac, NAR Forecast

Mortgage RatesIncreases ahead as economy continues to improve

0

500

1000

1500

2000

2500Multi-Family Housing Starts (thousand units)

Single Family Housing Starts (thousand units)

Quarter

20112010200920082007200620052004

Multi-Family Housing StartsSingle Family Housing Starts

History Forecast

2006200520044 3 42 3 4 1 2 3 4 1 2 3 4 1

2007

Tho

usan

ds

2 3 4 1 22008

3 120092 3 4 1 2

20101 2

2011

Sources: Bureau of the Census, NAR Forecast

Housing StartsBuilding activity improves in late 2010 and 2011

-8

-6

-4

-2

0

2

4

6

8GDP

Quarter

20112010200920082007200620052004

History Forecast

2006200520043 42 3 4 1 2 3 4 1 2 3 4 1

2007

% G

DP

Gro

wth

(S

AA

R)

2 3 42008

1 2 3 42009

1 2 3 4 1 22010

1 22011

Sources: Bureau of Economic Analysis, NAR Forecast

Economic GrowthSteady, moderate growth

Source: Bureau of Labor Statistics, NAR forecast

UnemploymentRemaining at high levels due to new workers who can’t find jobs

Source: Bureau of Labor Statistics, NAR forecast

Payroll JobsSome positive news, but still far to go

0

2

4

6

8

10

12GDP

Quarter

20112010200920082007200620052004

History Forecast

2006200520043 42 3 4 1 2 3 4 1 2 3 4 1

2007

perc

ent

2 3 42008

1 2 3 42009

1 2 3 4 1 22010

1 22011

-2500

-2000

-1500

-1000

-500

0

500

1000GDP

Quarter

20112010200920082007200620052004

History Forecast

2006200520043 42 3 4 1 2 3 4 1 2 3 4 1

2007

tho

usan

ds

2 3 42008

1 2 3 42009

1 2 3 4 1 22010 2011

1 2

quarterly change in payrolls (job gains)

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®7

U.S. Economic OutlookApril 2010

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

2009 2010 2011 2008 2009 2010 2011 I II III IV I II III IV I II

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®8

Looking at Key Economic Data:Numbers, Forecasts, and the Housing Outlookby Jed Smith, Managing Director, Quantitative Research

As we emerge from the Great Reces-sion we are bombarded with economic commentary on a daily basis. In the recent past the economy has experienced a signifi-cant number of problems:

n Jobs. The economy has shed over 8 million jobs between late 2007 (the beginning of the recession) and the present. At the same time, the economy needs to create 1.4 million jobs per year to accommodate new workers entering the workforce.

n Decreases in wealth. The Great Reces-sion took a toll on household and nonprofit wealth. According to the Federal Reserve, overall household/non-profit wealth declined by $11.7 trillion in late 2009 from its peak in 2007, in an economy with a total output (that is, Gross Domestic Product or GDP) of $14.5 trillion.

n Home sales. Existing-home sales declined from approximately 7 million units to 5 million sales per year. During the same time, new home construc-tion dropped from a rate of 2.3 million single family homes per year to 575,000 homes. Given that an existing home sale pulls through an additional $57,000 of additional GDP spending, the declines in home sales and construction have had a major economic impact.

n The “shadow banking” system. Leh-man, General Electric Credit Corpora-tion, AIG, Bear Stearns, among others crashed in October 2007, causing major credit availability problems.

n GDP growth turned negative during the Great Recession, and has been some-what weaker than would normally oc-cur during emergence from a recession.

Lifestyle, family, and ownership enjoy-ment are clearly important considerations in the purchase of a new home. The client will be focused on the local housing market in terms of price, availability, and trends. But changes in the economy – and perhaps more importantly, consumers’ views of the economy – can impact the outlook for both residential and commercial sales as

well as new constructions. Consequently, many clients may ask: “Where is the Econo-my Headed?”

How do we understand where the economy is going when there are so many economic numbers and concepts men-tioned on a continuing basis? And for real estate professionals, the question is likely to be: “What do the economic numbers mean for our business and our clients?”

Where is the Economy Headed? A Look at Economic Data

There is no dearth of economic data; indeed, there’s tons of it out there. Monthly and quarterly data on consumption, invest-ment, exports, imports, Gross Domestic Product (GDP), employment, interest rates, housing construction, housing sales, con-sumer and producer prices, manufactur-ing, demographic data, and a wide variety of other economic statistics are readily available. What data are relevant to REAL-TORS® and their clients?

There are five major data “releases” of particular interest that can give a good overview of the economy, as well as signs about the future direction of housing.

1. Employment: If people don’t have jobs, they are unlikely to buy homes. They’re also likely to cut back on other, non-essential expenditures. Data on

employment trends – changes in em-ployment, the outlook for employment, and stability of employment -- appear to be strong indicators for the housing outlook. As of the first quarter of 2010, there were 14.9 million people unem-ployed. But the good news – the latest jobs figures indicate that the economy generated 162,000 new jobs in March,

and the unemployment rate remained steady at 9.7 percent.

2. Interest Rates: A quarter of a percent change in the interest rate can mean tens of thousands of dollars in costs over a thirty-year mortgage. An increase from 5-6 percent on a thirty year $200,000 loan can change the monthly payment of principal and inter-est by $125, an increase of 11.6 percent. Interest rates – along with home prices – can have a major impact on housing affordability. In the first quarter of 2010 rates were near 5 percent and are ex-pected to remain reasonable, although with some increases as the economy continues to improve.

3. Consumer Mood: Every month The Conference Board reports its survey of consumer confidence – an overall sum-mation of how people feel about the current state of the economy. Changes in consumer confidence tend to reflect future changes in the economy. In 2007

IN FOCUS

Consumer Confidence Index (1985 = 100)

Existing-home Sales (SAAR)

Exi

stin

g-ho

me

sale

sth

ous

ands

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500Existing-home Sales (SAAR)

0

20

40

60

80

100

120

Consumer Confidence Index (1985 = 100)

Jan2010

Jan2009

Jan2008

Jan2007

Jan2006

Jan2005

Jan2004

Jan2003

Jan2002

Co

nsumer C

onfidence Index

Sources: The Conference Board, NAR Research, Haver Analytics

Consumer Confidence and Home Sales

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®9

consumer mood averaged at 103, drop-ping to 25 in February of 2009. A read-ing in the 90 to 100 range would signify an economy headed to full employment.Currently, the data have shown some upward movement but tend to suggest a slow but positive recovery.

4. Gross Domestic Product (GDP): GDP is a measure of the overall economic output, and stood at $14.5 trillion in the final quarter of 2009. Economic growth is forecast to increase in the neighborhood of 3 percent per year—somewhat slower than one 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

Looking at Key Economic Data Numbers, Forecasts, and the Housing Outlook(continued)

homes available for sale), just to mention two. And remember – all real estate is local. National trends may not be those reflected in local markets. This makes the role of a local real estate professional even more vital to property buyers and sellers.

The home purchase decision is about lifestyle, family, hopes, and the future. How-ever, the economic side is clearly important. An overview of the numbers can provide the basis for addressing clients’ questions about the real estate outlook – that is, where the economy has been, where it is headed, and current prices and sales.

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 on the latest statistics and analysis from NAR’s Research Division. Beginning in June, we will premiere a new feature in Real Estate Insights. Research Update will be a regular column in this newslet-ter, which will provide information about developments in the real estate industry, current NAR Research studies, as well as links to other insightful information. What will you find in Research Update?

Here’s a look.

Latest DevelopmentsResearch Webinar for April: Homebuyers and Sellers: A

Demographic Look You know the overall home buyer

and seller statistics, but this webinar will dive deeper into the statistics to describe demographic differences. How do single female buyers differ from single males or married couples? How do different age groups and household composition change the way buyers finance and look for homes? All these questions and more will be answered during this webinar, which is scheduled for April 28 at 2pm EDT. Register now.

Multifamily Fundamentals The economy concluded 2009 with

a positive level of activity. Gross domes-tic product advanced at a 5.6 percent rate. Other economic indicators also pointed towards a continued recovery. At the same time, commercial real estate concluded the year with mixed results. Fundamentals remained weak, invest-ments were down and the volume of dis-tressed properties increased. Contracting credit and a tightened lending environ-ment added to the pressure. In the broad landscape of commercial properties, the multifamily sector has fared comparative-ly better. Demand for space was mod-est but positive. Net absorption closed the year at 105,458 units. Yet, there are factors which caused adverse impacts in

the sector. View the Commercial Real Estate Outlook

News You Can UseNew: Relocation Reports

These reports pinpoint which coun-ties relocation clients are coming from and going to, along with relative income information. Relocation Reports are available for all counties in the U.S. and can now be downloaded online, for FREE.

Economists’ Podcast: Latest Housing Data and the Economy

On the second Tuesday of every month, NAR’s Chief Economist, Law-rence Yun, will discuss the current factors, issues, and data affecting REALTORS® and their businesses. Get a wealth of infor-mation straight from the source with a quick listen – each podcast is around 5 minutes long and provides a timely mar-ket update. In this podcast, Chief Economist Lawrence Yun discusses the mixed messages on the economy that the latest housing data provides. Listen to the latest Podcast

Research is Now on Face-book, Active Rain, RealTown, and Twitter!

The National Association of REAL-TORS® has been surveying members to find out about their use of technology like websites and blogs for several years. Now, Research, too, has its very own Fa-cebook group, Active Rain and RealTown presences, as well as a presence on Twit-ter. Research’s social media pages are not only a place for our members to receive insight into our latest surveys, commen-taries and reports, but also an avenue for you to make your thoughts known to us and your fellow REALTORS®. There may be certain special trends in the market-place that Research may be unaware of – such as a significant rise in foot traffic at open houses or continuing long delays in getting short sales to close. This is an open forum for discussion rather than a one-sided monologue.

Another Valuable Tool from NAR Research

Research Update is a great destination to get the “headlines” from NAR Re-search. And you can use the information from Update in your own newsletters, marketing materials, and presentations. But you don’t have to wait until June. For more information about Research Update, visit www.realtor.org/research/re-searchupdatearchives.

Research Store Research Product StoreCommercial Real Estate Commercial OutlookReports by Topic Find the Research You WantReal Estate Insights Commentaries, Forecasts and ArticlesNAR News Releases News ReleasesContact Research Staff Directory

Useful Info

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®11

Single-Women Home Buyers: A Growing Segment By Jessica Lautz, Research Economist

In the summer of 2009, NAR Re-search surveyed recent home buyers about their experience with the home

search process, and the use of real estate professionals in purchas-ing a home. The results of the survey were published in NAR’s 2009 Profile of Home

Buyers and Sellers. Results of that survey show that

a significant share of home buyers are single women. Indeed, the percentage of single-women buyers has increased from 14 percent in 1995 to 21 percent in 2009. These home purchasers account for the second largest share of adult households who purchase homes. Single females make up one-quarter of the first-time buyer population and 17 percent of the repeat buyer population. We look at some results below from the most recent Profile to get a better description of who single women buyers are.

Single Female Home BuyersThe median age of all home buyers

was 39 years old, compared to 41 for single female buyers. Among single-female buyers, 58 percent were first-time home buyers in 2009, compared to 47 percent of all home buyers. The median house-hold income for single-women home buyers was lower than that of all other homebuyer household types. Single females reported a median household income of $47,900 in 2008 compared to $73,100 among all home buying households. This difference in house-hold income should not be completely surprising as 68 percent of home buying households are couples – and so perhaps likely to have two income earners. The difference in median income for single women households compared to those for single men is less striking—single men typically made $53,700 in 2008. Ad-ditionally, single women households are less likely to have children living at home than couples. Results from the survey show that 22 percent of single women home buyers have children at home, while 38 percent of all home buyers have children at home.

What They BuyWhile the majority of single female

buyers purchase a single-family home, single female households are more likely than other household types to purchase an apartment/condominium or a town-house/rowhouse. One in four single female buyers purchase a house in an urban area/central city, which is a higher percentage compared to all other house-hold compositions except single males. Still, the majority of single female home buyers purchase a home in the suburbs, similar to all buyers.

Single female buyers are more likely to purchase an existing home than are other buyers. This makes the role of a real estate professional even more important to single female buyers. Only 14 percent of single female buyers purchased a new home compared to 18 percent of all buyers. Single female buyers also tend to purchase smaller homes, typically buying homes that are 1,480 square feet in size compared to the median size of 1,800 square feet purchased among all buyers. Once single females found the home they purchased, they expect to live there for 10 years.

Why They BuyMore than one-third of all home buy-

ers buy a home for the desire to own. This has been the most cited reason consistently for the last several years,

but it is even more true of single female buyers. Nearly half of single female buy-ers purchase a home because they have a desire to own a home. The second most cited reason for single female buyers in choosing to purchase a home is a change in family situation—13 percent of single female buyers purchase for this reason, compared to 9 percent of all buyers.

In comparison to other household types, single female buyers are more likely to have lived with parents, rela-tives or friends before buying their own residence, 20 percent compared to 12 percent of all buyers. Single female buyers are also more likely to rent an apartment or house before buying their own place compared to all buyers. Both previous living situations are related to the large share of single female buyers being first-time buyers.

Real Estate Professionals and the Home Search

When single female buyers first start to look for a home they contacted a real estate agent, contacted a mortgage broker or talked with a friend or relative more frequently than did other buy-ers. While 87 percent of single females use the Internet in their home search, a slightly larger percentage – 89 percent -- use a real estate agent. Real estate agents are a trusted resource that single female

MARKET INTELLIGENCE

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20

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212020

2221

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*buyers who purchased homes between July 2008 and June 2009 **beginning in 2003, NAR’s survey of home buyers and sellers was conducted annually Source: The 2009 NAR Profile of Home Buyers and Sellers

Single Women Home Buyers(as a percent of all home buyers)*

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. A larger share of single female home buy-ers first find the home they purchased from their agent compared to all buyers – 40 percent vs. 36 percent, respectively. Underscoring the importance of the real estate agent to single women buyers is the fact that a higher share of single females purchased their home through a real estate agent than through any other source: 79 percent compared to 77 per-cent of all buyers.

Single women buyers, like all other buyers, most want their agent to help them find the right home to purchase, but they place more importance than 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 agent and knowledge of the purchase process.

Home FinancingSingle female buyers are similar to all

buyers when it comes to financing their home purchase. However, there are some differences. Similar to all buyers, about nine in ten finance their home purchase through a mortgage, and the majority use savings as the source of their down pay-ment. A higher share of single female buy-ers receive a gift from a friend or relative as a down payment source compared 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.

What it Means for Real Estate Pro-fessionals

Single women are likely to continue to be a significant segment of home buyers. By utilizing the information above as a helpful tool, as well as other informa-tion found in the 2009 NAR Profile of Home Buyers and Sellers, real estate professionals may be able to under-stand and serve their clients better. This diligence will be rewarded: single females are more likely than other buyers to turn to real estate agents first and stay with the real estate agent throughout the purchasing process.

Source: The 2009 NAR Profile of Home Buyers and Sellersdetail may not add to 100 due to rounding

All Single-Female

Buyers Buyers

Desire to own a home 35 % 47 %Job-related relocation or move 9 3Desire for larger home 9 3Change in family situation 9 13Affordability of homes 8 8Desire for a home in a better area 4 2Desire to be closer to family/friends/relatives 4 4Desire to be closer to job/school/transit 3 2

Primary Reason for Purchasing a Home(Percentage Distribution)

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®13

Residential Housing Market Data: Monthly Seriesn Pending Home Salesn Existing Home Sales n Median Sales Pricesn Housing Affordability Index

Residential Housing Market Data: Quarterly Seriesn Existing Home Sales by Staten Metropolitan Area Median Sales Pricesn Housing Affordability Index (quarterly and first-time homebuyer)

Commercial Market Data and Reportsn Commercial Real Estate Forecast (quarterly)n Commercial Real Estate Outlook (quarterly)n Commercial Real Estate Leading Indicator (quarterly)n 2009 NAR Commercial Member Profilen Commercial Real Estate Market Survey

Web Exclusivesn Daily commentaryn Multimedian Webinars and Podcastsn Facebook

LINKS TO STATISTICAL DATA AND NAR RESEARCH RESOURCES

Real Estate Insights / April 2010 / ©2010 NATIONAL ASSOCIATION OF REALTORS®14

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 Business Trends Forum05/13/2010 | 08:00 AM - 10:00 AMThe U.S. Housing Market: Is Recovery In Sight? NAR Chief Economist Lawrence Yun will be joined by Mark Zandi, Chief Economist and Founder of Moody’s Economy.com. These nationally recognized experts will offer insights, perspectives and forecasts regarding residential real estate and the economy, the future of the U.S. mortgage finance delivery system, and the role 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 and training experts Amy Chorew of The Tech Byte and Ginger Wilcox from the Social Media Marketing Institute, will discuss the best practices to utilize NAR research and statistics in your social media marketing campaign.

RESOURCES FROM NAR RESEARCH

Economic Issues & Commercial Business Trends Forum05/13/2010 | 1:00 PM - 3:00 PMLawrence Yun, NAR Chief Economist will be joined by Ajay Rajadhyaksha of Barclays Capital and Brendan Reilly from the Commercial Mortgage Securities Association in a discussion of the economic recovery, developments in the capital markets and the implications of financial changes for commercial real estate in 2010 and beyond.

For locations of these informative sessions, check your Midyear Conference program. For more information about the meetings, visit www.realtor.org/midyear.nsf/pages/expo.