Most residential market drivers are dropping again and a few improved slightly during the spring. However the housing market has begun to expand due to near record high home affordability and taxpayer subsidies for buying new houses. The subsidies are temporary but appear to be enough to initiate the recovery.

The recovery will be slow until consumer confidence catches up well into next year. Homebuilders will continue to struggle for sales against discount pricing for the oversupply of existing homes for sale. Recovery will also be slowed by the financial inability of homebuilders to build inventory in advanced of the expected rise in home sales.

As always, the remodeling market lags. All of the key indicators are negative except for the small increase in existing home sales. This is a long lead indicator with most of the remodeling work spurred by buying an existing home not taking place for many many months.

Key Indicators of the U.S. Market Environment — July 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)	129.8	178.8	May	171.6	High	Falling
Consumer income growth, % change y/y (U.S. Commerce Dept.)	4.7	-1.3	May	1.7	Low	Falling
Consumer real income growth, % change y/y (U.S. Commerce Dept.)	7.0	3.7	May	6.1	High	Rising
Employment change, 000s (U.S. Labor Dept.)	-161	-322	May	-467	High	Falling
Household net worth, % change y/y (FRB)	5.0	-18.7	Q1	-16.2	Average	Falling
30-Year fixed mortgage rate, % level (Freddie Mac)	6.43	5.42	Jul 23 09	5.20	Low	Falling
1-Year ARM mortgage rate, % level (Freddie Mac)	5.24	4.93	Jul 23 09	4.77	Low	Falling
Consumer confidence index (The Conference Board)	51.0	54.8	Jun	49.3	Low	Rising
Housing market index (NAHB)	16	15	Jul	17	Low	Rising
Homes under construction, 000s (U.S. Census Bureau)	976	652	Jun	630	Low	Falling
New home inventory, number-of-months supply (U.S. Census Bureau)	10.7	10.7	May	10.2	High	Falling
Existing home inventory, number-of-months supply (NAR)	11	9.8	Jun	9.4	High	Falling
Residential Remodeling
Existing home sales, 000s (NAR)	4,900	4,720	Jun	4,890	Low	Rising
Building supply store sales, seasonally adj. $ millions (U.S. Census Bureau)	27,274	24,612	Jun	24,036	Low	Falling
Wood product shipments, seasonally adj. $ millions (U.S. Census Bureau)	8,066	7,486	May	7,502	Low	Falling
Remodeling contractor hours worked, % change y/y (U.S. Labor Dept.)	-5.9	-8.6	May	-9.7	Low	Falling
Mortgage refinancing applications, index (Mortgage Banking Association)	1,393	2,009	Jul 17 09	2,090	Average	Falling

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.