Residential market drivers are now balanced with the number or improving indicators now about the same as the number still worsening. The initial housing recovery in the last few months is the result of near record high home affordability and taxpayer subsidies for buying new houses. These are temporary boosts which will ebb in the next few months but they are sufficient to get a sustainable recovery underway. The recovery pace will slow over the balance of the year under pressure from rising but still recession level buyer confidence and the shrinking but still much excessive level of existing homes for sale. Homebuilders’ weak balance sheets after a long deep recession are preventing some of the usual access to credit early in the recovery to build ahead of anticipated gains in new home sales.

Recovery has not begun in the residential remodeling market. It is still as much as six months ahead. The only positive market driver is rising sales of existing homes but this has just turned up and is a long lead indicator.

Key Indicators of the U.S. Market Environment — Sept 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)	122.5	159	July	158.5	High	Falling
Consumer income growth, % change y/y (U.S. Commerce Dept.)	5.9	1.1	July	2.9	Low	Falling
Consumer real income growth, % change y/y (U.S. Commerce Dept.)	11.7	3.8	July	4.0	High	Rising
Employment change, 000s (U.S. Labor Dept.)	-175	-276	Aug	-216	High	Falling
Household net worth, % change y/y (FRB)	-1.5	-16.8	Q2	-12.3	Low	Rising
30-Year fixed mortgage rate, % level (Freddie Mac)	6.04	5.12	Sep 17 09	5.04	Low	Falling
1-Year ARM mortgage rate, % level (Freddie Mac)	5.14	4.69	Sep 17 09	4.58	Low	Falling
Consumer confidence index (The Conference Board)	58.5	47.4	Jun	54.1	Low	Rising
Housing market index (NAHB)	17	18	Sep	19	Low	Rising
Homes under construction, 000s (U.S. Census Bureau)	956	630	Jul	595	Low	Falling
New home inventory, number-of-months supply (U.S. Census Bureau)	10.1	8.5	Jul	7.5	High	Falling
Existing home inventory, number-of-months supply (NAR)	11	9.4	Jul	9.4	High	Falling
Residential Remodeling
Existing home sales, 000s (NAR)	4,990	4,890	Jul	5,240	Low	Rising
Building supply store sales, seasonally adj. $ millions (U.S. Census Bureau)	26,963	23,674	Aug	23,387	Low	Falling
Wood product shipments, seasonally adj. $ millions (U.S. Census Bureau)	8,249	7,332	Jul	7,437	Low	Steady
Remodeling contractor hours worked, % change y/y (U.S. Labor Dept.)	-3.9	-13.2	Jul	-8.6	Low	Falling
Mortgage refinancing applications, index (Mortgage Banking Association)	2,300	1,983	Sep 11 2009	2,455	Average	Steady
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.