1. Week of November 15–November 19, 2010
Produced by NAR Research

2. Weekly Economic Forecast
Indicator Updated
Forecast
Past Week’s
Forecast
Directional
Shift
GDP 2010 Q4: 2.4% 2.6% ↓
GDP 2011 Q1: 2.6% 2.5% ↑
GDP 2011 Q2: 2.3% 2.3% ↔
Unemployment rate by mid-
2011:
9.4% 9.4% ↔
Average 30-year fixed mortgage
rate by mid-2011:
5.0% 4.9% ↑
NAR's monthly official forecast as of November 5
Produced by NAR Research

3. Monday, 11/15/10
• Retail sales increased in October by
1.2% on a seasonally adjusted basis.
This follows a 0.7% increase in
September.
• Growth in retail sales was primarily
attributable to automobiles, which
increased by 5.7% in October.
Although retail sales have been
steadily increasing since early 2009,
home purchases, such as furniture
and other furnishings, have been
flat over that same time frame.
• The 10 Year Treasury Note traded at
2.85% early this morning. This was
13 basis points higher than Friday’s
close of 2.76% and 37 bps higher
than its most recent nadir of 2.84%
set in early November.
• The 10 Year Treasury Note and the
30 Year mortgage rate are highly
correlated. An increase in the
treasury rate suggests higher
mortgage rates.
Economic Updates
Produced by NAR Research

4. Tuesday, 11/16/10
• Inflation signals remain
somewhat mixed. While
producer price inflation was up
0.4 percent in October for
finished goods and up 4.3
percent for the year ending in
October, core inflation, the index
that excludes food and energy
prices, was down 0.6 percent in
October and up only 1.5 percent
for the year. These readings
were lower than anticipated.
• Higher growth of the indexes for
immediate and crude goods,
suggest that continued growth in
finished prices is on the horizon.
The producer price of finished
consumer durable goods, items
like cars, home appliances,
consumer electronics, and
furniture, fell 1.4 percent in
October but were 0.4 percent
higher over the year ending that
month. This price growth could
eventually lead to higher prices
for consumers.
Economic Updates
Produced by NAR Research

5. Tuesday, 11/16/10
(cont’d)
• At the same time, overall industrial
production was flat in October.
Gains in manufacturing production
were offset by a retreat in utilities
due to warmer weather and a lower
need for heat. Business equipment
production grew substantially while
consumer good production was flat
after two months of decline.
Consumer good production growth
grew at a 10-year record level in May.
• Capacity utilization, a measure of
how much productive capability is
being used, was flat in October.
When capacity utilization is high,
prices of the resources used tend to
rise. When capacity utilization is
low, this slack in the economy can
cause prices to fall. At a rate 6.6
percentage points above the low in
June 2009 and 5.8 percentage points
below its average from 1972 to 2009,
capacity utilization does not point
toward inflation.
Economic Updates
Produced by NAR Research

6. Wednesday, 11/17/10
• Mortgage purchase applications were
down 5.0 percent for the week ending
November 12th
. Purchase applications do
not take into consideration cash buyers
who according to the September
REALTORS® Confidence Index make up
as much as 29 percent of transactions.
• Mortgage purchase applications were
down 12.0 percent from the same week a
year ago.
• Refinances, which made up 80.3 percent
of mortgage activity, fell 16.5 percent as
mortgage rates climbed 18-basis points
to 4.46 percent on a 30-year fixed
mortgage.
• Housing starts fell 11.7 percent in
October from the previous month to a
seasonally adjusted 519,000 starts on an
annual basis. Starts are off 1.9 percent
from the previous year.
• Multifamily homes were the primary
cause of the drop as single family
structures were down just 1.1 percent
from September.
Economic Updates
Produced by NAR Research

7. Wednesday, 11/17/10
(cont’d)
• Consumer prices were relatively
tame, moving up 1.2 percent from
September.
• Core inflation, which excludes food
and energy, was unchanged.
• The housing component of the CPI
rose 0.1 percent in October.
• The weakness in the CPI helps
justify recent quantitative easing
measures by the Federal Reserve as
it combats potential deflationary
pressures.
Economic Updates
Produced by NAR Research

8. Thursday, 11/18/10
• Figures for unemployment
insurance claims for the week
ending November 13th
were released
this norming. Jobless claims
registered 439,000, while last
week’s figures were revised upward
by 2,000.
• Continuing claims for
unemployment insurance fell
48,000 to 4.295 million and the 4-
week average is down 133,000
compared to last month.
• New claims for unemployment
insurance fell sharply two weeks
ago and have held steady. This
trend is important for the
economy as it suggests that
employers are hiring. Improved
employment will help confidence
and consumer demand in turn,
which the economy desperately
needs to get back on track.
Improved confidence and
employment should also help spur
home sales in both the short-term
and long-term.
Economic Updates
Produced by NAR Research

9. Friday, 11/19/10
• MBA’s National Delinquency
Survey for 3rd
quarter shows some
improvements among mortgage
delinquencies. The delinquency
rate decreased to 9.13 percent of all
loans outstanding, which is a 72
basis points drop from the quarter
before, and a 51 basis points drop
from one year ago. The
delinquency rate includes all first-
liens with missed payments but
not those in the process of
foreclosure. The rate of seriously
delinquent loans, 90+ days late or
in the foreclosure process, also
dropped from the previous quarter
and from the third quarter of last
year.
Economic Updates
Produced by NAR Research

10. Friday, 11/19/10 (cont’d)
• Foreclosure inventory was down as
well. The percentage of loans on
which foreclosure actions were
started during the third quarter was
up, suggesting some clearing of the
augmented 90+ delinquency
inventory. The combined share of
loans in foreclosure or at least one
missed payment was 13.78 percent on
a non-seasonally adjusted basis, a 19
basis point drop from 13.97 percent
last quarter. There are still 1.9
million of loans in the foreclosure
inventory that need to be worked
through, which is very high. Hence,
distressed sales will continue to be
with us throughout 2011.
• Separately, FHA’s Fannie and
Freddie loans originated since 2009
and 2010 have performed very well,
with a lower default rate than in pre-
bubble years. The current distressed
mortgages are loans mostly
originated during the ‘good times’ of
2005 and 2006, and not recently
originated mortgages.
Economic Updates
Produced by NAR Research