Housing and Economic Outlook

National Association of Local Housing Finance AgenciesApril 26, 2012

David CroweChief Economist

Builder Sentiment Up since September 2011NAHB/Wells Fargo Housing Market Index

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-1

0

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-1

1

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

0

10

20

30

25

Index

NAHB/Wells Fargo Housing Market Index

10q1 10q2 10q3 10q4 11q1 11q2 11q3 11q4 12q10

5

10

15

20

25

30Index, SA

April ‘12 = 25

Quarterly Data Message

Total Payroll Employment

07 08 09 10 11 12-1,000

-800

-600

-400

-200

0

200

400Thousands, Average monthly change

March ‘12 = 120K

Unemployment Rate

07 08 09 10 11 124

5

6

7

8

9

10

11% of Labor Force

March ‘12 = 8.2%

Total Personal Income

07 08 09 10 11 12-15%

-10%

-5%

0%

5%

10%

15%Annualized % change

Feb ‘12 = 2.6%

Real Gross Domestic Product

07 08 09 10 11-10

-8

-6

-4

-2

0

2

4

6Annualized % change

Consumer Confidence Index

07 08 09 10 11 1220

30

40

50

60

70

80

90

100

110

120Index, 1985=100

March ‘12 = 70.1

Single-family Building Permits

07 08 09 10 11 12250

350

450

550

650

750

850

950

1,050

1,150

1,250Thousands

March ‘12 = 462K

Multifamily Building Permits

07 08 09 10 11 12100

150

200

250

300

350

400

450

500Thousands

March ‘12 = 285K

Underlying Fundamentals

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

103,000

104,000

105,000

106,000

107,000

108,000

109,000

110,000

111,000

112,000

113,000

114,000

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

% Chg HHLDS # HHLDS Linear (# HHLDS) Linear (# HHLDS)

Number of Households

Percentage Change

(million households)

1 to 2 million gap

Household Shortfall Demographic Trends Are Positive

Housing Fundamentals Remain GoodMortgage Rates

78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 120

2

4

6

8

10

12

14

16

18

20

5.2

Percent

Fixed-Rate

Adjustable-Rate3.2

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 112.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

4.7

3.2

3.2 average

House Prices At Long-term RatioHouse Price-to-Income Ratio

Markets Are Local

Seriously Delinquent Loans Trending Lower

05 06 07 08 09 10 110

1

2

3

4

5

6

7

8

9

10

11Mortgages 90+ days delinquent or in foreclosure, % of all loans

But Delinquency Inventory Varies by StateFL MD

DE

WA

NY

UT

OR

SC

NC MI

NM LA ME

TN WI

AZ

MO

MS

KY TX OK VT

WV

NE

SD

ND

0123456789

1011121314151617181920

Six states with more than oneyear’s inventory of distressed properties

24 states with less than six months inventoryof distressed properties

Foreclosure inventory plus 90-day+ delinquencies

U.S. = 8.4 months

Foreclosure inventory plus 90-day+ delinquencies month’s supply at annual sales rate

Increase in Employment Greater Than National Average

Change in EmploymentBelow U.S. average

0.6% to < 0.9%0.9% to < 1.3%1.3% to < 1.8%1.8% or greater

Increase in Building Permits Greater Than National Average

Change in Building permitsBelow U.S. average

6.7% to < 11.7%11.7% to < 18.3%18.3% to < 31.2%31.2% or greater

Change in House Prices Relative to U.S.

Change in House pricesBelow U.S. average

-4.2% to < -2.8% -2.8% to < -1.7%-1.7% to < -0.6%-0.6% and greater

NAHB/First American Improving Markets Index – The Number of Markets is Improving

Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 120

20

40

60

80

100

120

1223

30

41

76

98 99 101

AR Little Rock FL Tampa MD Cumberland NC Charlotte OH Springfield TX College Station

CA Fresno GA Rome Hagerstown Goldsboro OK Tulsa Dallas

CA Merced IA Ames ME Lewiston Greensboro OR Corvallis Laredo

CO Boulder Des Moines MI Detroit Greenville OR Portland Longview

Denver Dubuque Flint Rocky Mount PA Altoona McAllen

Fort Collins Iowa City Grand Rapids Winston-Salem Erie Midland

Greeley Sioux City Lansing ND Bismarck Lancaster Odessa

CT New Haven Waterloo Monroe Fargo Pittsburgh San Antonio

DC Washington ID Boise City Muskegon Grand Forks Williamsport Tyler

FL Cape Coral Coeur d’Alene Saginaw NE Lincoln SC Charleston Victoria

Crestview IN Elkhart MN Minneapolis NJ Ocean City Spartanburg UT Provo

Deltona Evansville MO Columbia NY Buffalo SD Sioux Falls St. George

Jacksonville Indianapolis Jefferson City Glens Falls TN Chattanooga VT Burlington

North Port Lafayette Joplin Rochester Kingsport WVHuntington

Orlando KY Louisville Kansas City Utica Nashville WYCasper

Panama City LA Lake Charles MS Jackson OH Columbus TX Amarillo Cheyenne

Punta Gorda Monroe NC Burlington Dayton Brownsville

101 Improving Metropolitan Areas

Improving Markets101 Improving Metropolitan Areas

Forecast

Real GDP Growth – Hesitated but Improving

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 130%

200%

400%

600%

800%

1000%

1200% Q/Q Percent Change, SAAR

Sales Dipped, But Due to RecoverNew and Existing Single-Family Home Sales

90 92 94 96 98 00 02 04 06 08 10 120

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0Million

Existing (R)

New (L)

Million

Single-Family Starts – Waiting for Job Recovery

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 130

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000Thousands

Trough to Current:Mar 09 = 353,000Mar 12 = 462,000

+31%

1995-2003 1,256,000  2010 471,000 2011 433,000 -8%2012 506,000 17%2013 660,000 30%

Multifamily Housing Starts Healthy Response from Growth in Renters

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 130

150

300

450

600Thousands

Trough to Current:4th Q 09 = 82,0001st Q 12 = 192,000

134%

1995-2003 331,000  2010 114,0002011 177,000 55%2012 216,000 22%2013 235,000 9%

Residential Remodeling – Continuous ImprovementOwner-Occupied Improvements

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

YR 4Q/4Q Chg 3.5%12.0% 7.9%

Billions 2005 $, SAAR

Source: U.S. Census Bureau, NAHB Economic and Housing Forecast.

Long Road Back to Normal* for Single-Family Housing Starts – Q4 2013

* Normal is the average from Q1 2000 to Q4 2003

* Normal Production is measured as Single-Family housing starts between Q1 2000 and Q4 2003

Single-Family Housing StartsRelative to Normal

Less than 45%45% to 49%49% to 61%61% to 70%Greater than 70%

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