The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.

Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; William Poole; Eric Rosengren; and Kevin M. Warsh.

WASHINGTON, D.C. (July 25, 2007) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 20, 2007.  The Market Composite Index, a measure of mortgage loan application volume, was 609.0, a decrease of 3.6 percent on a seasonally adjusted basis from 631.6 one week earlier.  On an unadjusted basis, the Index decreased 3.5 percent compared with the previous week and was up 13.1 percent compared with the same week one year earlier.

The Refinance Index decreased 1.4 percent to 1692.9 from 1717.4 the previous week and the seasonally adjusted Purchase Index decreased 5.0 percent to 424.2 from 446.5 one week earlier. The seasonally adjusted Conventional Index decreased 3.8 percent to 892.1 from 927.2 the previous week, and the seasonally adjusted Government Index decreased 1.2 percent to 136.9 from 138.6 the previous week.
 
The four week moving average for the seasonally adjusted Market Index is down 0.4 percent to 621.6 from 624.0.  The four week moving average is down 0.3 percent to 440.5 from 441.6 for the Purchase Index, while this average is down 0.6 percent to 1683.6 from 1693.3 for the Refinance Index.

The refinance share of mortgage activity increased to 38.5 percent of total applications from 37.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 21.0 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.59 percent from 6.61 percent, with points decreasing to 1.55 from 1.6 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.24 from 6.29 percent, with points increasing to 1.43 from 1.33 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 5.62 from 5.60 percent, with points increasing to 1.13 from 1.11 (including the origination fee) for 80 percent LTV loans.

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country.  Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field.

LOS ANGELES (July 25) - Home sales decreased 24.7 percent in June in California compared with the same period a year ago, while the median price of an existing home increased 3.2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

 

"The focus on foreclosures and subprime lending is ongoing and, coupled with higher inventories of homes for sale, is prompting many would-be buyers to play a ‘wait-and-see' role," said C.A.R. President Colleen Badagliacco. "However, well-maintained homes with curb appeal that are priced for today's market continue to sell. It's often a matter of counseling buyers and sellers to set realistic expectations on both sides of the transaction."

"First-time buyers continue to be impacted by tighter mortgage underwriting standards and the affordability challenge, which has not improved significantly despite price declines in most regions of the state," she said.

 

Closed escrow sales of existing, single-family detached homes in California totaled 364,280 in June at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 24.7 percent from the 483,690 sales pace recorded in June 2006.

 

The statewide sales figure represents what the total number of homes sold during 2007 would be if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

 

The median price of an existing, single-family detached home in California during June 2007 was $594,260, a 3.2 percent increase over the revised $575,850 median for June 2006, C.A.R. reported. The June 2007 median price increased 0.2 percent compared with May's revised $592,780 median price.

"With just over a 10-month supply of homes for sale on the market, we expect further softness in prices in the coming months," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "The San Francisco Bay Area continues to see leaner inventory levels compared to Southern California and the state as a whole."

"Unlike the downturn we experienced in the early 1990s, the sales decline is not driven by weakening economic conditions," she said. "Both the California and U.S. economies continue to expand."

 

Highlights of C.A.R.'s resale housing figures for June 2007:

 

. C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in June 2007 was 10.1 months, compared with 6.1 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

 

. Thirty-year fixed-mortgage interest rates averaged 6.66 percent during June 2007, compared with 6.68 percent in June 2006, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.68 percent in June 2007 compared with 5.71 percent in June 2006.

 

. The median number of days it took to sell a single-family home was 51.7 days in June 2007, compared with 45.3 days (revised) for the same period a year ago.

 

Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORSâ throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

 

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 28 percent, or 105 out of 375 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for June may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/index.php?id=Mzc1OTE=

. Statewide, the 10 cities and communities with the highest median home prices in California during June 2007 were: Laguna Beach, $1,700,000; Burlingame, $1,637,500; Los Altos, $1,635,000; Newport Beach, $1,615,000; Palos Verdes Estates, $1,542,000; Saratoga, $1,465,000; La Canada-Flintridge, $1,400,000; Mill Valley, $1,395,000; Manhattan Beach, $1,300,000; Hermosa Beach, $1,205,000.

 

. Statewide, the 10 cities and communities with the greatest median home price increases in June 2007 compared with the same period a year ago were: Menlo Park, 41.5 percent; Palos Verdes Estates, 25.9 percent; La Canada-Flintridge, 21.7 percent; Arcadia, 21.1 percent; Newport Beach, 20.1 percent; Santa Monica, 18.7 percent; Moorpark, 16.1 percent; Chino Hills, 12.6 percent; Saratoga, 11.9 percent; Los Angeles, 11.7 percent.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (http://www.car.org/ ) is one of the largest state trade organizations in the United States, with more than 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

 

June 2007 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted

 

	Median Price	Percent Change in Price from Prior Month	Percent Change in Price from Prior Year	Percent Change in Sales from Prior Month	Percent Change in Sales from Prior Year
	Jun-07	May-07		Jun-06		May-07	Jun-06
Statewide
Calif. (sf)	$594,260	0.2%		3.2%		-1.4%	-24.7%
Calif. (condo)	$442,670	0.7%		2.9%		0.2%	-19.9%
C.A.R. Region
Central Valley	$329,960	-0.5%		-9.1%		2.3%	-34.3%
High Desert	$306,310	-2.3%		-8.5%		1.5%	-55.1%
Los Angeles	$589,150	-0.7%		1.6%		-5.0%	-16.8%
Monterey Region	$748,770	0.8%		2.3%		0.4%	-29.1%
Monterey County	$715,000	2.9%		4.0%		-9.6%	-36.5%
Santa Cruz County	$780,000	0.1%		2.6%		9.4%	-22.4%
Northern California	$392,360	1.7%		-8.0%		-6.3%	-15.0%
Northern Wine Country	$634,480	4.0%		-0.5%		0.8%	-14.7%
Orange County	$723,860	1.4%		-0.2%		1.0%	-21.7%
Palm Springs/Lower Desert	$393,750	0.4%		5.5%		-8.2%	-37.9%
Riverside/San Bernardino	$390,230	-2.1%		-3.4%		-6.1%	-49.9%
Sacramento	$351,620	-1.3%		-8.5%		2.7%	-26.5%
San Diego	$619,180	1.1%		0.6%		3.9%	-17.5%
San Francisco Bay	$842,600	-1.3%		5.1%		-0.3%	-21.4%
San Luis Obispo	$625,000	7.8%		0.7%		22.9%	-7.9%
Santa Barbara County	$800,000	-9.2%		-5.6%		18.5%	-1.8%
Santa Barbara South Coast	$1,375,000	2.2%		6.6%		9.6%	15.2%
North Santa Barbara County	$422,000	-4.7%		-8.1%		27.8%	-2.8%
Santa Clara	$865,000	0.8%		5.5%		-1.5%	-18.0%
Ventura	$692,730	-1.0%		-2.1%		10.1%	-22.2%

 

 

na - not available

 

*Based on closed escrow sales of single-family, detached homes only (no condos). Reported month-to-month changes in sales activity June overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.

 

sf = single-family, detached home

 

Source: CALIFORNIA ASSOCIATION OF REALTORS®

 

 

Median Prices By Region - Current Month vs. Year Ago

 

	Jun-07	May-07		Jun-06
Statewide
Calif. (sf)	$594,260	$592,780	r	$575,850	r
Calif. (condo)	$442,670	$439,603	r	$430,130	r
C.A.R. Region
Central Valley	$329,960	$331,580		$362,960
High Desert	$306,310	$313,550		$334,790
Los Angeles	$589,150	$593,570	r	$580,160
Monterey Region	$748,770	$743,180		$732,250
Monterey County	$715,000	$695,000		$687,500
Santa Cruz County	$780,000	$779,000		$760,000
Northern California	$392,360	$385,870		$426,370
Northern Wine Country	$634,480	$610,220		$637,870
Orange County	$723,860	$714,130		$725,190
Palm Springs/Lower Desert	$393,750	$392,200		$373,350
Riverside/San Bernardino	$390,230	$398,490		$403,870	r
Sacramento	$351,620	$356,100		$384,240
San Diego	$619,180	$612,370		$615,630
San Francisco Bay	$842,600	$853,910		$801,820	r
San Luis Obispo	$625,000	$579,550		$620,540
Santa Barbara County	$800,000	$880,680		$847,220	r
Santa Barbara South Coast	$1,375,000	$1,345,500	r	$1,290,000
North Santa Barbara County	$422,000	$442,860		$459,090
Santa Clara	$865,000	$858,000		$819,950
Ventura	$692,730	$699,480		$707,690

 

 

na - not available

r - revised

Source: CALIFORNIA ASSOCIATION OF REALTORS®

La Jolla, CA.--Lenders sent California homeowners the highest number of mortgage default notices in over a decade last quarter, the result of flat or falling prices, anemic sales and a market struggling with the excesses of the 2004-2005 home buying frenzy, a real estate information service reported.

Lenders filed 53,943 Notices of Default (NoDs) during the April-through-June period. That was up 15.4 percent from 46,760 for the previous quarter, and up 158.0 percent from 20,909 for second-quarter 2006, according to DataQuick Information Systems of La Jolla.

Last quarter's default level was the highest since 54,045 NoDs were recorded statewide in fourth-quarter 1996. Defaults peaked in first-quarter 1996 at 61,541. A low of 12,417 was reached in third-quarter 2004. An average of 34,172 NoDs have been filed quarterly since 1992, when DataQuick's NoD statistics begin.

"A lot of the loans that went bad last quarter were made at or just beyond the cycle's peak, between summer '05 and summer '06. Appreciation rates for most of that period were in the double digits and lenders let many households stretch their finances to the max, and beyond. It's that pool of 'beyond' mortgages that the market is working its way through," said Marshall Prentice, DataQuick's president.

Most of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.

Because a residence may be financed with multiple loans, last quarter's 53,943 default notices were recorded on 50,901 different residences, up 162.8 percent from 19,370 for second quarter 2006.

On primary mortgages statewide, homeowners were a median five months behind on their payments when the lender started the default process. The borrowers owed a median $11,126 on a median $342,000 mortgage.

On lines of credit, homeowners were a median eight months behind on their payments. Borrowers owed a median $3,457 on a median $67,121 credit line. However the amount of the credit line that was actually in use cannot be determined from public records.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. DataQuick provides online access to property information, including default notices. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process. Due to late data availability, statistics for Alameda County are extrapolated.

The default numbers reflect wide regional differences. The second-quarter numbers were a record in Riverside, Contra Costa, Sacramento and most Central Valley counties. In Los Angeles County it was still less than half the first-quarter 1996 peak, reflecting the depth of the recession in the mid-1990s, as well as the relative strength of today's housing market.

On a loan-by-loan basis, mortgages were least likely to go into default in Marin, San Francisco and San Mateo counties. The likelihood was highest in San Joaquin, Merced and Riverside counties.

The median price paid for a California home purchased between July 2005 and August 2006 was $460,000. Of those homes, the median price paid for those that went into default last quarter was $445,500, mostly because of low default rates at the high end.

Roughly half, 54.6 percent, of the homeowners in default emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was 88.0 percent. The increased portion of homes lost to foreclosure reflects the slow real estate market, as well as the number of homes bought during the height of the market with multiple-loan financing. In selling a home, all loans must be paid off, which is not the case in the formal foreclosure process, where second mortgages and lines of credit are most often written off.

 

Notices of Default
houses and condos

County/Region	2006Q2	2007Q2	%Chg
Los Angeles	4,586	10,393	126.6%
Orange	1,255	2,984	137.8%
San Diego	1,778	4,383	146.5%
Riverside	2,287	6,648	190.7%
San Bernardino	1,839	5,141	179.6%
Ventura	452	1,059	134.3%
SoCal*	12,271	30,828	151.2%
San Francisco	127	257	102.4%
Alameda	649	1,612	148.4%
Contra Costa	725	2,316	219.4%
Santa Clara	530	1,275	140.6%
San Mateo	222	463	108.6%
Marin	58	118	103.4%
Solano	350	1,065	204.3%
Sonoma	202	462	128.7%
Napa	47	128	172.3%
Bay Area	2,910	7,696	164.5%
Santa Cruz	73	155	112.3%
Santa Barbara	147	434	195.2%
San Luis Obisp	79	208	163.3%
Monterey	128	483	277.3%
Coast	427	1,280	199.8%
Sacramento	1,352	3,840	184.0%
San Joaquin	604	1,983	228.3%
Placer	276	627	127.2%
Kern	549	1,593	190.2%
Fresno	590	1,380	133.9%
Madera	92	215	133.7%
Merced	214	642	200.0%
Tulare	258	428	65.9%
Yolo	77	232	201.3%
El Dorado	86	222	158.1%
Stanislaus	407	1,286	216.0%
Kings	50	75	50.0%
San Benito	33	122	269.7%
Yuba	45	171	280.0%
Colusa	14	39	178.6%
Sutter	56	109	94.6%
Central Valley	4,703	12,964	175.7%
Mountains*	155	328	111.6%
North Calif*	443	847	91.2%
Statewide	20,909	53,943	158.0%
* includes additional counties

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 17,408 during the second quarter. That is the highest number in DataQuick�s statistics, which go back to 1988. That was up 57.8 percent from 11,032 for the previous quarter, and up 799.2 percent from 1,936 for last year�s second quarter. The prior peak of foreclosure sales was 15,418 in third-quarter 1996, the low was 637 in the second quarter of 2005.

There are 8.4 million houses and condos in the state.

While foreclosures tugged property values down by almost 10 percent in some areas eleven years ago, their effect in most markets today is still negligible. However, the continued rise in NoDs means that the number of homes lost to foreclosure will continue to increase in the second half of this year. Foreclosure levels are already high in certain Inland Empire and Central Valley markets, where the worst-hit neighborhoods might already be seeing property values eroded somewhat by foreclosures, DataQuick reported.

 

Recorded Trustees Deeds
houses and condos

County/Region	2006Q2	2007Q2	%Chg
Los Angeles	287	2,581	799.3%
Orange	110	821	646.4%
San Diego	292	1,714	487.0%
Riverside	281	2,509	792.9%
San Bernardino	137	1,489	986.9%
Ventura	37	316	754.1%
SoCal Total*	1,152	9,504	725.0%
San Francisco	9	49	444.4%
Alameda	69	480	595.7%
Contra Costa	62	778	1154.8%
Santa Clara	38	256	573.7%
San Mateo	17	97	470.6%
Marin	6	25	316.7%
Solano	36	324	800.0%
Sonoma	18	163	805.6%
Napa	3	34	1033.3%
Bay Area Total	258	2,206	755.0%
Santa Cruz	13	46	253.8%
Santa Barbara	16	137	756.3%
San Luis Obispo	4	52	1200.0%
Monterey	8	154	1825.0%
Coast Total	41	389	848.8%
Sacramento	175	1,662	849.7%
San Joaquin	64	785	1126.6%
Placer	29	220	658.6%
Kern	25	533	2032.0%
Fresno	40	402	905.0%
Madera	6	55	816.7%
Merced	7	240	3328.6%
Tulare	17	142	735.3%
Yolo	1	103	10200.0%
El Dorado	4	89	2125.0%
Stanislaus	36	522	1350.0%
Kings	7	27	285.7%
San Benito	5	38	660.0%
Yuba	4	84	2000.0%
Sutter	10	57	470.0%
Central Valley Total*	430	4,969	1055.6%
Mountains*	8	90	1025.0%
North Calif*	47	250	431.9%
Statewide	1,936	17,408	799.2%
* includes additional counties

Source: DataQuick Information Systems

 

WASHINGTON --The United States Senate Committee on Appropriations adopted an amendment to the FY2008 Financial Services and General Government Appropriations Bill that permanently prohibits national bank conglomerates from engaging in real estate brokerage and property management.

"Today's action in the Senate was a great team effort," said NAR Senior Vice-President of Government Affairs Jerry Giovaniello. "REALTORS across the country, state and local association staff and our NAR staff in Washington, DC joined forces to achieve this victory."  "Our long-time REALTOR Champions in the U.S. Senate, including Senators Hillary Clinton (D-NY), Richard Durbin (D-IL), Wayne Allard (R-CO) and Richard Shelby (R-AL) were instrumental in passing the amendment," , Giovaniello said. "New champions on the Banking Issue, particularly Majority Leader Harry Reid (D-NV) and Senator Chris Dodd (D-CT), were very involved in passing this amendment.

Earlier this summer, the House of Representatives passed their version of the legislation containing a one-year  moratorium.  The two bills will go to conference in September to develop the final bill.also  who  to work out a final bill.

WASHINGTON, June 29, 2007 - The National Association of Realtors® welcomes today's statement issued by the federal regulators of banks, thrifts and credit unions that prescribes strong underwriting and consumer protection standards in connection with certain subprime adjustable rate mortgages (ARMs). Those mortgages can impose an unaffordable "payment shock" on borrowers when the interest rate resets.  They include "2/28" mortgages that have a two-year "teaser rate" that adjusts as often as every six months based on a high margin.  Until recently, escalating home prices have masked problems with such mortgages since families have been able to refinance into another subprime mortgage with low initial rates, but incur another round of high costs and fees.  NAR urges lenders to act promptly to help borrowers at risk of losing their homes and, at the same time, minimize the loss to the lender. "NAR has long been concerned about abusive lending by some irresponsible lenders.  In response, NAR has adopted strong policies urging Congress and the federal regulators to set high standards to prevent abusive lending with strong underwriting and other pro-consumer lending standards," said NAR President Pat V. Combs, vice president of Coldwell Banker-AJS-Schmidt in Grand Rapids, Mich.  "Starting with its first consumer mortgage education brochure in 2005, NAR has worked to do its share to educate consumers about how to avoid predatory lending and find fair and affordable mortgages.  For families that now find themselves trapped in an abusive loan, we recently published our newest brochure called ‘Learn How to Avoid Foreclosure and Keep Your Home.'  To help families avoid predatory lenders altogether, last fall we released a brochure on ‘How to Avoid Predatory Lending,'" Combs said. The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

The Conference Board announced today that the U.S. leading index increased 0.3 percent, the coincident index increased 0.2 percent and the lagging index increased 0.2 percent in May.

• The May increase in the leading index reverses its April decline. And April's large decrease was revised up slightly due to data revisions in housing permits and manufacturers' new orders components. The leading index grew 0.3 percent from November to May (a 0.6 percent annual rate). In May, unemployment insurance claims (inverted) and stock prices made the largest positive contributions, followed by housing permits.
• The coincident index increased again in May. From November to May, the coincident index rose by 0.8 percent (a 1.6 percent annual rate). In May, employment made the largest contribution to the index. The coincident index grew at an average annual rate of about 2.5 percent in 2006, but in recent months, its growth has been fluctuating in the 1.5 to 2.0 percent range (annual rate).
• Following an essentially flat period in the second half of 2006, the leading index picked up somewhat in December, but this was followed by two consecutive declines. The leading index is still at the same level as in January 2007, and it is 0.3 percent above its May 2006 level. At the same time, real GDP grew only at a 0.6 percent annual rate in the first quarter of 2007, following a 2.5 percent rate in the fourth quarter of 2006. The recent performance of the leading index has been mixed with increases offsetting decreases and the number of components rising roughly equaling the number falling. The current behavior of the composite indexes suggests that economic growth is likely to continue, albeit at a slow pace, in the near term.

LEADING INDICATORS. Five of the ten indicators that make up the leading index increased in May. The positive contributors - beginning with the largest positive contributor - were average weekly initial claims for unemployment insurance (inverted), stock prices, building permits, index of consumer expectations, and vendor performance. The negative contributors - beginning with the largest negative contributor - were real money supply*, average weekly manufacturing hours and interest rate spread. The manufacturers' new orders for consumer goods and materials* and manufacturers' new orders for nondefense capital goods* held steady in May.

The leading index now stands at 138 (1996=100). Based on revised data, this index decreased 0.3 percent in April and increased 0.6 percent in March. During the six-month span through May, the leading index increased 0.3 percent, with four out of ten components advancing (diffusion index, six-month span equals forty five percent).

COINCIDENT INDICATORS. Three of the four indicators that make up the coincident index increased in May. The positive contributors to the index - beginning with the largest positive contributor - were employees on nonagricultural payrolls, personal income less transfer payments*, and manufacturing and trade sales*. The negative contributor was industrial production.

The coincident index now stands at 124 (1996=100). This index increased 0.1 percent in April and increased 0.2 percent in March. During the six-month period through May, the coincident index increased 0.8 percent.

LAGGING INDICATORS. The lagging index stands at 128.6 (1996=100) in May, with three of the seven components advancing. The positive contributors to the index - beginning with the largest positive contributor - were commercial and industrial loans outstanding*, average duration of unemployment (inverted) and ratio of consumer installment credit to personal income*. The negative contributors - beginning with the largest negative contributor - were change in CPI for services and change in labor cost per unit of output*. The ratio of manufacturing and trade inventories to sales* and average prime rate charged by banks* held steady in May. Based on revised data, the lagging index increased 0.2 percent in April and decreased 0.1 percent in March.

DATA AVAILABILITY AND NOTES.

The data series used by The Conference Board to compute the three composite indexes and reported in the tables in this release are those available "as of" 12 Noon on June 20, 2007. Some series are estimated as noted below.

* Series in the leading index that are based on The Conference Board estimates are manufacturers' new orders for consumer goods and materials, manufacturers' new orders for nondefense capital goods, and the personal consumption expenditure used to deflate the money supply. Series in the coincident index that are based on The Conference Board estimates are personal income less transfer payments and manufacturing and trade sales. Series in the lagging index that are based on The Conference Board estimates are inventories to sales ratio, consumer installment credit to income ratio, change in labor cost per unit of output, the consumer price index, and the personal consumption expenditure used to deflate commercial and industrial loans outstanding.

The procedure used to estimate the current month's personal consumption expenditure deflator (used in the calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month's consumer price index when it is available before the release of the U.S. Leading Economic Indicators.

Effective with the September 18, 2003 release, the method for calculating manufacturers' new orders for consumer goods and materials (A0M008) and manufacturers' new orders for nondefense capital goods (A0M027) has been revised. Both series are now constructed by deflating nominal aggregate new orders data instead of aggregating deflated industry level new orders data. Both the new and the old methods utilize appropriate producer price indices. This simplification remedies several issues raised by the recent conversion of industry data to the North American Classification System (NAICS), as well as several other issues, e.g. the treatment of semiconductor orders. While this simplification caused a slight shift in the levels of both new orders series, the growth rates were essentially the same. As a result, this simplification had no significant effect on the leading index.

WASHINGTON, July 11, 2007 - Home prices are expected to recover in 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors®. Lawrence Yun, NAR senior economist, said a good buyers' market has evolved.  "Buyers now have an overwhelming advantage given the wide selection of homes available in many markets," he said.  "But with profit margins coming under pressure, homebuilders will limit new construction well into 2008.  This should help the overall inventory level to move steadily into a more balanced state."   Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year.  New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006.  Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year. Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800.  The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100. "Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008," Yun said.  "Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters." The 30-year fixed-rate mortgage is estimated to average 6.7 percent during the second half of this year, and fluctuate around 6.6 percent in 2008. Growth in the U.S. gross domestic product (GDP) will probably be 2.0 percent in 2007, compared with a 3.3 percent growth rate last year; GDP is forecast to grow 2.8 percent in 2008. The unemployment rate is likely to average 4.6 percent in 2007, unchanged from last year.  Inflation, as measured by the Consumer Price Index, is projected at 2.6 percent in 2007, down from 3.2 percent last year.  Inflation-adjusted disposable personal income should rise 3.0 percent this year, up from a 2.6 percent gain in 2006. The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Citing moderate economic growth during the first six months of the year, the Federal Reserve's Open Market Committee last week decided to leave its short-term interest rate at 5.25 percent, where it has stood since June 2006. The federal funds target rate is the interest rate charged by banks when they borrow funds "overnight" from each other. While the federal funds rate has no direct impact on other rates, such as those for mortgages, it can alter them indirectly.

In a prepared statement, the Fed acknowledged that while readings on core inflation have improved in recent months, risk remains that inflation will fail to moderate in the coming months as expected. "A sustained moderation in inflation pressures has yet to be convincingly demonstrated," according to the statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.

Per CAR:

Pending Homes Sales Index Declines While Some Regions Are Up

WASHINGTON, July 03, 2007 -  Pending home sales, a forward-looking indicator, shows existing-home sales may ease but should stay fairly close to present levels in the months ahead, according to the National Association of Realtors®. The Pending Home Sales Index*, based on contracts signed in May, rose in the West and Northeast but fell in the Midwest and South.  The national index stood at 97.7 in May, down 3.5 percent from a downwardly revised April index of 101.2, and is 13.3 percent lower than May 2006 when the reading was 112.7.  In April, the index was 10.4 percent lower than a year earlier. Lawrence Yun, NAR senior economist, stressed that housing activity continues to be impacted by tighter lending criteria and a lack of buyer confidence.  "Some transactions are being postponed from mortgage market disruptions," he said.  "But better supervised lending will put housing in a fundamentally healthier state over the long term. "Mortgage purchase applications are trending up, with some of the rise due to buyers reapplying for alternatives to subprime financing.   Nonetheless, home sales should stay close to present levels in the months ahead given an accumulating pent-up demand," Yun said. The pent-up demand results from slow household formation, which is significantly below levels that would be expected in a period of job creation and economic growth.  "As consumer confidence improves, home sales will rise," he said. The index is a leading indicator for the housing sector, based on pending sales of existing homes.  A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales. Annual changes in the index are more closely related to actual market performance than are month-to-month comparisons.  As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful. The PHSI in the West rose 5.6 percent in May to 95.4 but was 13.7 percent below a year ago.  In the Northeast, the index increased 3.8 percent from April to 93.1 but is 9.6 percent lower than May 2006.  The index in the South fell 7.6 percent in May to 107.2 and was 15.4 percent below a year ago.  In the Midwest, the index dropped 8.9 percent in May to 89.4 and was 11.7 percent below May 2006.  The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.