Key housing market drivers improved again over the last month. Home affordability inched up to a usually high index value of 173.5 with lower home prices and credit costs offsetting rising unemployment. The confidence indexes for both homebuilders and consumers rose significantly although both remain in the depressed range. The inventory of homes for sale fell slightly. Housing permits, starts, and sales all dipped in March but all remain above the low point at the beginning of the year. Pending home sales also increased for the second month. The dismal January housing activity numbers may turn out to be the bottom of this cycle.

The various federal plans to boost housing are beginning to have an impact which will become progressively larger through the summer. The first federal programs to prevent foreclosures did not work but the more expensive second round of plans is clearly keeping a significant number of financially stressed homeowners from adding their homes to the pile of excess inventory for sale. This is a key reason why the slide in home prices is easing and the FHFA index covering homes with conforming mortgages is now rising. While mortgage payment forgiveness plans can stop the housing recession there will be a price to pay beyond 2010 in both higher inflation and more sluggish economic growth.

Key Indicators of the U.S. Market Environment — April 2009
Residential Construction (New and Remodeling)

	Year Ago	Previous Month or Qtr.	Latest		Level	Recent Trend	Impact on Const.
New Residential
Home Affordability Index (NAR)	137.2	172.6	Feb	173.5	High	Rising
Consumer income growth, % change y/y (U.S. Commerce Dept.)	3.7	-2.7	Feb	-2.7	High	Falling
Consumer real income growth, % change y/y (U.S. Commerce Dept.)	-0.5	6.6	Feb	6.6	High	Rising
Employment change, 000s (U.S. Labor Dept.)	-122	-651	Mar	-663	Low	Falling
Household net worth, % change y/y (FRB)	-13.3	-12.0	Q4	-17.9	Average	Falling
30-Year fixed mortgage rate, % level (Freddie Mac)	5.92	5.00	Apr 23 09	4.80	Low	Falling
1-Year ARM mortgage rate, % level (Freddie Mac)	5.19	4.86	Apr 23 09	4.82	Low	Falling
Consumer confidence index (The Conference Board)	62.8	26.9	April	39.2	Low	Rising
Housing market index (NAHB)	20	9	April	14	Low	Rising
Homes under construction, 000s (U.S. Census Bureau)	1,013	761	Mar	728	Low	Falling
New home inventory, number-of-months supply (U.S. Census Bureau)	11.2	11.2	Mar	10.7	High	Falling
Existing home inventory, number-of-months supply (NAR)	10	9.7	Mar	9.8	High	Steady
Residential Remodeling
Existing home sales, 000s (NAR)	4,920	4,710	Mar	4,570	Low	Falling
Building supply store sales, seasonally adj. $ millions (U.S. Census Bureau)	26,740	24,645	Mar	24,488	Low	Falling
Wood product shipments, seasonally adj. $ millions (U.S. Census Bureau)	8,094	7,467	Feb	7,515	Low	Falling
Remodeling contractor hours worked, % change y/y (U.S. Labor Dept.)	-3.6	-7.0	Feb	-8.2	Low	Falling
Mortgage refinancing applications, index (Mortgage Banking Association)	9,783	20,932	April 24 2009	5,108	High	Rising

Abbreviations: y/y = year over year; WE = week ending; ARM = adjustable-rate mortgage;
NAR = National Association of Realtors; FRB = Federal Reserve Board;
NAHB = National Association of Home Builders.
Table: Reed Construction Data and Reed Construction Data - CanaData.