Abilene Area Local Market Report, First Quarter PDF Free Download

Area Local Market Report, First Quarter 217 Today's Market $18, Median Price (Red Line) and One-year Price Growth 2% $16, $14, 15% $12, $1, 1% $8, $6, 5% $4, $2, % $ 28 29 21 211 212 213 214 215 216 217-5% Local Price Trends Price Activity Current Median Home Price (217 ) $158,8 $23,7 1-year (4-quarter) Appreciation (217 ) 2.2% 6.9% 3-year (12-quarter) Appreciation (217 ) 26.4% 2.8% 3-year (12-quarter) Housing Equity Gain* $33,2 $39,7 7-year (28 quarters) Housing Equity Gain* $47,7 $64,333 9-year (36 quarters) Housing Equity Gain* NA $32,167 *Note: Equity gain reflects price appreciation only Local Trend Prices continue to grow relative to last year Gains in the last 3 years have extended the trend of positive price growth after the recession Conforming Loan Limit** $424,1 FHA Loan Limit $275,665 Local Median to Conforming Limit Ratio 37% Note: limits are current and include the changes made in December 216. $636,15 $636,15 not comparable Most buyers in this market have access to government-backed financing Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 217 NAR Regional Vice President representing region 1 is Leslie Rouda Smith.

Benefits of Ownership: Total Equity Appreciation $7, Total Equity Accrued to Owner by Year and Quarter of Purchase $6, $58,888 $5, $4, $3, $2, $1, $6,4 $ 24 26 28 21 212 214 216 Total Equity Gained** through 217 from quarter in which home was of purchased Price Activity Local Trend 1-year (4-quarter) $6,4 $18,582 3-year (12-quarter)* $39,147 $48,743 5-year (2-quarter)* $52,545 $83,996 Price appreciation and principle payments 7-year (28 quarters)* $59,959 $76,553 in the last 3 years have boosted total equity 9-year (36 quarters)* If purchase in 25, the national price peak NA NA $46,748 $45,884 growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Apr) 12-month Job Change (Mar) 36-month Job Change (Apr) Current Unemployment Rate (Apr) Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 9 6 4 3.8% 3.6% 1.3% Not Comparable Not Comparable Not Comparable 4.4% 5.% 1.6% Employment has held up and is on an upward trend Unemployment has risen since the same period last year, but 's labor market has been more resilient than the national average Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resourc 6.3% 4.3 Natural R5.2% Natural Natural Resources/ #N/A #N/A #N/A #N/A Resources/M Mining/Con #N/A #N/A ining/constru struct #N/A #N/A Government ct 5.2% Manufacturin Other 15.4% Manufacturing 4.4% 6.3% 3 g Manufac Services 8.4% 4.4% 3.9% Trade/Transporta 19.4% 13.2 Trade/Tr 18.6% Government Leisure & Trade/Transp Information Other 1.3% 18.9%.9 Hospitality ortation/utilit Informa1.9% Services 11.% ies Financial 3.8% Activ 5.6% 3.8 Financia5.7% Leisure & 19.4% Prof. Hospitality & Busine 8.1% 5.5 Professi14.1% Information 11.5% Educ. & Healt 2.7% 14.1 1.3% Educatio15.8% Financial Educational Leisure & Hos 11.5% 7.8 Activities Leisure 11.% Other Services 3.8% 2.6 Prof. & & Health Educ. & 5.6% Other S 3.9% Business Services Health Government 18.9% 12.9 Services 93.7% Governm15.4% 15.8% Professional Services 1.% 8.1% & Business #N/A #N/A 2.7% #N/A #N/A Services #N/A #N/A #N/A #N/A 14.1% 12-month Employment Change by Industry in the Area (Mar - 217) Goods Producing NA Information Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing -3 NA NA 1 Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.4% -2-1 5 Trade/Trans portation/uti lities 18.6% Information 1.9% Financial Activities 5.7% Trade/Transportation/Utilities 3 Government 3 State Economic Activity Index Texas 12-month change (217 - Apr) 36-month change (217 - Apr) 3.1% 1.5% 3.% 9.9% Texas's economy is stronger than the nation's, but slowed from last month's 3.15% change

Local Fundamentals New Housing Construction 12-month Sum of 1-unit Building Permits through Apr 217 271 not comparable The current level of construction is 9.9% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits 247 not comparable Production above trend for an extended period of time could cause prices to moderate as inventory is built up. Single-Family Housing Permits (Apr 217) 12-month sum vs. a year ago -12.3% 8.4% Construction continues to decline from last year 35 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 3 25 2 15 1 5 While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability 3% Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 25% 2% 15% 1% 5% % 1998 2 22 24 26 28 21 212 214 216 Monthly Mortgage Payment to Income Ratio for 216 Ratio for 217 7.6% 8.2% 15.2% 15.6% Weak by local standards and could weigh on demand Historical Average 7.5% 19.2% More affordable than most markets Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 9% 8% 7% 6% 5% 4% 3% 2% 1% % 215 215 215 216 216 216 216 217 Median Home Price to Income Ratio for 216 1.4 Ratio for 217 1.4 Historical Average 1.3 2.8 2.7 2.7 The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1998 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 2 22 24 26 28 21 212 214 216 The Mortgage Market 3-year Fixed Mortgage Rate and Treasury Bond Yield 28 24 2 16 12 8 4 212 213 214 215 216 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 217 Spread (left axis) 3-Year FRM (Right axis) The first quarter was marked by rising mortgage rates. Short- and long- term interest rates continued to increase after November s elections. The Fed raised the federal fund in March, bringing the target from.75 percent to 1. percent while Freddie Mac published that the average interest rate on a 3-year conventional home loan was 4.2 percent in 217 from 3.8 percent in 216. Intermediate-term yields also increased during the quarter, with the 1-year Treasury closing at 2.4 percent. Although the Fed does not directly set mortgage rates, its actions can affect the housing market. Mortgage rates tend to move with the government s 1-year Treasury note, which serves as a benchmark for mortgage rates. However, homebuyers should bear in mind that mortgage rates still hover in the historically low range. Homebuyers have excellent purchasing power at these mortgage rates, and while it may make sense for fewer households to refinance, there are still some households that can save cash with a refinance. Looking ahead, despite the recent decline in April, interest rates are likely to head higher in 217. NAR is forecasting the 3-year fixed rate mortgage to average 4.3 percent for 217.

REALTOR Price Expectations 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) Source: NAR REALTOR Price Expectations Texas 217 - Apr Prior 12 months 3.8% 3.7% 4.2% 3.8% REALTORS expect weaker price growth in Texas than in the in the next 12 months although their local expectations are higher than a year ago.

Geographic Coverage for this Report The area referred to in this report covers the geographic area of the metro area as officially defined by the Office of Management and Budget of the Government. The official coverage area includes the following counties: Callahan County, Jones County, and Taylor County More information on the OMB's geographic definitions can be found at https://obamawhitehouse.archives.gov/omb/bulletins_default/

Area Local Market Report, Third Quarter 216 Today's Market $18, Median Price (Red Line) and One-year Price Growth 2% $16, $14, 15% $12, $1, 1% $8, $6, 5% $4, $2, % $ 27 28 29 21 211 212 213 214 215 216-5% Local Price Trends Price Activity Current Median Home Price (216 ) $157,5 $239,133 1-year (4-quarter) Appreciation (216 ).8% 5.2% 3-year (12-quarter) Appreciation (216 ) 13.3% 15.6% 3-year (12-quarter) Housing Equity Gain* $18,5 $32,267 7-year (28 quarters) Housing Equity Gain* NA $6,9 9-year (36 quarters) Housing Equity Gain* NA $17,967 *Note: Equity gain reflects price appreciation only Local Trend Prices are up from a year ago, but price growth is slowing Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access to FHA Loan Limit $271,5 $625,5 government-backed financing Local Median to Conforming Limit Ratio 38% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 216 NAR Regional Vice President representing region 1 is Matthew Ritchie.

Benefits of Ownership: Total Equity Appreciation $5, $45, $4, $35, $3, $25, $2, $15, Total Equity Accrued to Owner by Year and Quarter of Purchase $44,352 $1, $5, $3,729 $ 23 25 27 29 211 213 215 Total Equity Gained** through 216 from quarter in which home was of purchased Price Activity Local Trend 1-year (4-quarter) $3,729 $15,479 3-year (12-quarter)* $24,995 $41,932 5-year (2-quarter)* $46,362 $82,243 Price appreciation and principle payments 7-year (28 quarters)* NA $73,9 in the last 3 years have boosted total equity 9-year (36 quarters)* If purchase in 25, the national price peak NA NA $34,98 $28,13 growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Sep) 12-month Job Change (Aug) 36-month Job Change (Sep) Current Unemployment Rate (Sep) Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 1,1 4 2,4 4.2% 3.9% 1.6% Not Comparable Not Comparable Not Comparable 5.% 5.1% 1.8% Employment has held up and is on an upward trend Unemployment has risen since the same period last year, but 's labor market has been more resilient than the national average Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resourc 8.1% 5.6 Natural R5.2% Natural Resources/ Natural #N/A #N/A #N/A #N/A Mining/Con Resources/M struct #N/A #N/A ining/constru #N/A #N/A Government Government 5.2% ct Manufacturin Other 15.5% 17.9% Manufacturing 4.2% 8.1% 2.9 Manufac 8.4% g Services Trade/Transporta 19.3% 13.4 4.2% 3.9% Leisure Trade/Tr & 18.8% Trade/Transp Information Other 1.7% 1.2 Hospitality ortation/utilit Informa1.9% Services 1.6% ies Financial 4.3% Activ 5.2% 3.6 Financia5.7% Leisure & 19.3% Prof. Hospitality & Busine 8.1% 5.6 Professi14.1% 11.7% Information Educ. & Healt 19.6% 13.6 Educatio15.8% 1.7% Educational Leisure & Hos 11.7% 8.1 Financial Leisure & Health 1.6% Other Services Educ. 4.3% & 3 Prof. & Activities Other Services S 3.9% Health Business 5.2% 15.8% Government 17.9% 12.4 Services91.9% Governm15.5% Professional Services 1.% #N/A #N/A 8.1% & Business 19.6% #N/A #N/A Services #N/A #N/A #N/A #N/A 14.1% 12-month Employment Change by Industry in the Area (Sep - 216) Goods Producing NA Information Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing 2 NA NA Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.4% 1 1 3 1 1 Trade/Trans portation/uti lities 18.8% Information 1.9% Financial Activities 5.7% Trade/Transportation/Utilities 1 Government 1 State Economic Activity Index 12-month change (216 - Sep) 36-month change (216 - Sep) Texas 2.6% 12.% 2.9% 1.% The economy of Texas is growing more slowly than the rest of the nation, but improved modestly from last month's 2.52% change

Local Fundamentals New Housing Construction 12-month Sum of 1-unit Building Permits through Sep 216 39 not comparable The current level of construction is 29.6% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Sep 216) 12-month sum vs. a year ago 238 9.2% not comparable 9.5% Production above trend for an extended period of time could cause prices to moderate as inventory is built up. Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 35 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 3 25 2 15 1 5 While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability 3% Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 25% 2% 15% 1% 5% % 1997 1999 21 23 25 27 29 211 213 215 Monthly Mortgage Payment to Income Ratio for 215 Ratio for 216 7.8% 7.7% 15.6% 15.5% Weak by local standards, but better than the second quarter of 216 Historical Average 7.5% 19.5% More affordable than most markets Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 9% 8% 7% 6% 5% 4% 3% 2% 1% % 214 215 215 215 215 216 216 216 Median Home Price to Income Ratio for 215 1.4 Ratio for 216 1.4 Historical Average 1.3 2.8 2.9 2.7 The price-to-income ratio eased, but could be better Affordable compared to most markets

4. Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 3.5 3. 2.5 2. 1.5 1..5. 1997 1999 21 23 25 27 29 211 213 215 The Mortgage Market 3-year Fixed Mortgage Rate and Treasury Bond Yield 28 5.% 24 2 4.5% 4.% 3.5% 16 12 3.% 2.5% 2.% 8 4 1.5% 1.%.5% 211 212 213 214 215.% 216 Spread (left axis) 3-Year FRM (Right axis) The third quarter of 216 was marked by low mortgage rates. Presidential elections introduced uncertainty in the equity and bond markets which, as a rule, markets don t like. Furthermore, forecasts for production and inflation remained low, helping to keep rates contained in a narrow band, hovering between 3.44% and 3.46% for the period between July and September. For the entire quarter, the 3-year fixed-rate mortgages eased from 3.6 percent in the second quarter to 3.5 percent in the third quarter of 216, while the 1-year Treasury fell to 1.65 percent. What to expect about mortgage rates in the upcoming quarters? It seems that mortgage rates will move up but they will not change significantly while China s growth is still slow, Japan s woes continue, and the Eurozone continues to stagger along. However, the Fed is coming closer to reaching its dual mandate which could in turn result in rate hikes in the near future. Furthermore, the President- Elect s policies include increased infrastructure spending, tariffs, and immigration reform all of which could drive inflationary pressures over the longer term. NAR is forecasting the 3-year fixed rate mortgage to average just 4.1 percent for 217.

REALTOR Price Expectations 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) Source: NAR REALTOR Price Expectations Texas 216 - Sep 3.1% 3.% Prior 12 months 3.8% 3.2% REALTORS expect higher price growth in Texas than in the in the next 12 months. However, their price expectations for the local market are more modest than a year ago.

Area Local Market Report, Second Quarter 216 Today's Market $18, Median Price (Red Line) and One-year Price Growth 2% $16, $14, 15% $12, $1, 1% $8, $6, 5% $4, $2, % $ 27 28 29 21 211 212 213 214 215 216-5% Local Price Trends Price Activity Local Trend Current Median Home Price (216 ) $164,3 $239,167 1-year (4-quarter) Appreciation (216 ) 9.7% 4.9% Prices continue to grow relative to last year 3-year (12-quarter) Appreciation (216 ) 26.3% 17.8% 3-year (12-quarter) Housing Equity Gain* $34,2 $36,2 Information on the long-term trend is not 7-year (28 quarters) Housing Equity Gain* NA $64,8 available 9-year (36 quarters) Housing Equity Gain* NA $15,4 *Note: Equity gain reflects price appreciation only Conforming Loan Limit** $417, $625,5 Most buyers in this market have access to FHA Loan Limit $271,5 $625,5 government-backed financing Local Median to Conforming Limit Ratio 39% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 216 NAR Regional Vice President representing region 1 is Matthew Ritchie.

Benefits of Ownership: Total Equity Appreciation $7, Total Equity Accrued to Owner by Year and Quarter of Purchase $65,748 $6, $5, $4, $3, $2, $16,973 $1, $ 23 25 27 29 211 213 215 Total Equity Gained** through 216 from quarter in which home was of purchased Price Activity 1-year (4-quarter) 3-year (12-quarter)* $16,973 $41,44 $14,963 $46,878 5-year (2-quarter)* $56,66 $82,353 7-year (28 quarters)* NA $77,54 9-year (36 quarters)* NA $31,126 If purchase in 25, the national price peak NA $34,38 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Jun) 12-month Job Change (May) 36-month Job Change (Jun) Current Unemployment Rate (Jun) 5 2,1 4.2% Not Comparable Not Comparable Not Comparable 4.9% Employment has held up and is on an upward trend Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 4.2%.7% 5.3% 1.9% Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resourc 8.1% 5.6 Natural R5.3% Natural Resources/ Natural #N/A #N/A #N/A #N/A Mining/Con Resources/M struct #N/A Government #N/A ining/constru #N/A #N/A Government ct Other 5.3% 18.1% 14.5% Manufacturin Manufacturing 4.1% 8.1% 2.8 Manufac Services 8.6% g 4.% Trade/Transporta 19.6% 13.5 4.1% Leisure Trade/Tr & 19.% Trade/Transp Information Other Hospitality 1.7% 1.2 ortation/utilit Informa1.9% Services 11.3% ies Financial 4.3% Activ 5.2% 3.6 19.6% Financia5.8% Leisure & Prof. Hospitality & Busine 8.% 5.5 Professi14.1% 11.9% Information Educ. & Healt 19.% 13.1 1.7% Educatio15.5% Educational Leisure & Hos 11.9% 8.2 Financial Leisure & Health 11.3% Other Services Educ. 4.3% & 3Prof. & Activities Other Services S 4.% Health Business 5.2% 15.5% Government Services 18.1% 12.5 Services 91.9% Governm14.5% Professional 1.% #N/A 19.% #N/A 8.% & Business #N/A #N/A Services #N/A #N/A #N/A #N/A 14.1% 12-month Employment Change by Industry in the Area (Jun - 216) Goods Producing NA Information Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing Service Providing Excluding Government NA NA -1 NA Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Other Services Manufacturi ng 8.6% -1 1 2 Trade/Trans portation/uti lities 19.% Information 1.9% Financial Activities 5.8% Trade/Transportation/Utilities 1 Government 3 State Economic Activity Index Texas 12-month change (216 - Jun) 36-month change (216 - Jun) 2.3% 12.2% 3.% 1.2% Texas's economy is growing, but decelerated from last month's 2.32% change and lags the rest of the nation

Local Fundamentals New Housing Construction 12-month Sum of 1-unit Building Permits through Jun 216 314 not comparable The current level of construction is 33.2% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Jun 216) 12-month sum vs. a year ago 236 12.9% not comparable 1.6% Production above trend for an extended period of time could cause prices to moderate as inventory is built up. Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 35 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 3 25 2 15 1 5 While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability 3% Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 25% 2% 15% 1% 5% % 1997 1999 21 23 25 27 29 211 213 215 Monthly Mortgage Payment to Income Ratio for 215 Ratio for 216 7.8% 8.1% 15.6% 15.8% Weak by local standards and could weigh on demand Historical Average 7.5% 19.5% More affordable than most markets Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 9% 8% 7% 6% 5% 4% 3% 2% 1% % 214 214 215 215 215 215 216 216 Median Home Price to Income Ratio for 215 1.4 Ratio for 216 1.5 Historical Average 1.3 2.8 2.9 2.7 The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets

4. Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 3.5 3. 2.5 2. 1.5 1..5. 1997 1999 21 23 25 27 29 211 213 215 The Mortgage Market 3-year Fixed Mortgage Rate and Treasury Bond Yield 28 5.% 24 2 4.5% 4.% 3.5% 16 12 3.% 2.5% 2.% 8 4 1.5% 1.%.5% 211 212 213 214 215.% 216 Spread (left axis) 3-Year FRM (Right axis) The second quarter of 216 has been quite tumultuous with the surprising Brexit vote in the United Kingdom. While British citizens voted to leave the European Union last June, the full impact of the vote could take several years to be seen. In the near future, low mortgage rates and stronger refinancing are expected in the. Meanwhile, the 3-year fixed-rate mortgages eased from 3.7 percent in the 1st quarter of 216 to 3.6 percent in the second quarter of 216. Similarly, the 1-year Treasury fell to 1.75 percent which is the lowest rate after 212. As a result of the current market conditions, existing homeowners benefit from low rates by refinancing their mortgages while home affordability is increasing for first-time homebuyers. Rates are likely to remain unchanged as global economies remain weak. The uncertainty in China, Japan, Russia and Eurozone is expected to boost safe-haven buying which benefits mortgage-backed securities market. NAR is now forecasting fewer rate hikes by the FED in 216 and as a result the 3-year fixed rate mortgage is now expected to average just 4.3 percent for 216.

REALTOR Price Expectations 6.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: NAR REALTOR Price Expectations Texas 216 - Jul 3.9% 3.6% Prior 12 months 4.3% 3.4% REALTORS expect higher price growth in Texas than in the in the next 12 months. However, their price expectations for the local market are more modest than a year ago.

Area Local Market Report, First Quarter 216 Today's Market $18, $16, $14, $12, $1, $8, $6, $4, $2, $ Median Price (Red Line) and One-year Price Growth 27 28 29 21 211 212 213 214 215 216 2% 15% 1% 5% % -5% Local Price Trends Price Activity Current Median Home Price (216 ) $155,4 1-year (4-quarter) Appreciation (216 ) 6.7% 3-year (12-quarter) Appreciation (216 ) 29.% 3-year (12-quarter) Housing Equity Gain* $34,9 7-year (28 quarters) Housing Equity Gain* NA 9-year (36 quarters) Housing Equity Gain* NA *Note: Equity gain reflects price appreciation only $215,767 6.1% 22.6% $39,833 $48,2 $1,667 Local Trend Prices are up from a year ago, but price growth is slowing Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 37% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 216 NAR Regional Vice President representing region 1 is Matthew Ritchie.

Benefits of Ownership: Total Equity Appreciation $6, $5, Total Equity Accrued to Owner by Year and Quarter of Purchase $54,542 $4, $3, $2, $12,145 $1, $ 23 25 27 29 211 213 215 Total Equity Gained** through 216 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $12,145 $15,781 3-year (12-quarter)* $41,422 $49,356 5-year (2-quarter)* $53,546 $68,727 7-year (28 quarters)* NA $59,758 9-year (36 quarters)* NA $16,435 If purchase in 25, the national price peak NA $3,59 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Mar) 12-month Job Change (Feb) 36-month Job Change (Mar) Current Unemployment Rate (Mar) 6 6 2,3 3.8% Not Comparable Not Comparable Not Comparable 5.% Employment growth has eased, but remains positive Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 3.8%.9% 5.5% 2.% Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resour 7.8% 5.4 Natural 5.% Natural Natural Resources/ Resources/ #N/A #N/A #N/A #N/A Mining/Con Mining/Con struct #N/A Governmen #N/A struct #N/A #N/A Governmen 7.8% Manufacturi 5.% t Other t Manufacturing 4.1% 2.8 ng 18.3% Manufac8.5% Services 15.6% 4.1% 3.9% Trade/Transpo 19.5% 13.4 Trade/T 18.8% Other Leisure & Trade/Trans Information Services 1.7% 1.2 Hospitality portation/uti Informa1.9% 4.4% 1.7% lities Financial Act 5.2% 3.6 Financi 5.7% Leisure & 19.5% Prof. Hospitality & Busin 8.1% 5.6 Profess14.% 11.6% Educ. & Heal 19.2% 13.2 Information Educat 15.8% 1.7% Educational Leisure & Ho 11.6% 8 Leisure1.7% & Health Other Service Educ. 4.4% & Prof. 3 & Financial Other Services S3.9% Professiona Government Health Business Activities 15.8% 18.3% 12.6 92.2% Govern15.6% 1.% l & Services Services 5.2% Business #N/A 19.2% #N/A 8.1% #N/A #N/A Services #N/A #N/A #N/A #N/A 14.% 12-month Employment Change by Industry in the Area (Mar - 216) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA -1 NA NA -1 Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.5% -1 1 Trade/Tran sportation/ Utilities 18.8% Information 1.9% Financial Activities 5.7% Trade/Transportation/Utilities 5 Government 3 State Economic Activity Index Texas 12-month change (216 - Mar) 36-month change (216 - Mar) 2.5% 13.1% 3.1% 1.5% Texas's economy is growing, but decelerated from last month's 2.55% change and lags the rest of the nation

Local Fundamentals 12-month Sum of 1-unit Building Permits through Mar 216 New Housing Construction 31 not comparable The current level of construction is 28.7% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Mar 216) 12-month sum vs. a year ago 234 9.5% not comparable 11.3% Production above trend for an extended period of time could cause prices to moderate as inventory is built Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 35 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) 3 25 2 15 1 5 While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1997 1999 21 23 25 27 29 211 213 215 Monthly Mortgage Payment to Income Ratio for 215 Ratio for 216 7.8% 7.8% 15.6% 14.5% Weak by local standards, but better than the fourth quarter of 215 Historical Average 7.5% 19.5% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 214 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 214 214 215 215 215 215 216 Median Home Price to Income Ratio for 215 1.4 Ratio for 216 1.4 Historical Average 1.3 2.8 2.6 2.7 The price-to-income ratio eased, but could be better Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1997 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1999 21 23 25 27 29 211 213 215 The Mortgage Market 28 24 2 16 12 8 4 211 3-year Fixed Mortgage Rate and Treasury Bond Yield 212 213 214 215 216 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) The first quarter of 216 was marked by paroxysms in financial, energy, and commodity markets. The uncertainty in China and the emerging-market economies, the gathering doubt about the sustainability of the modern European project, and weakness in domestic growth were the issues of the early days of 216. With regard to the mortgage market, the year began after the FED started its tightening cycle with the first rate hike this past December. However, since the start of the year mortgage rates have dropped as the FED held off on expected rate hikes. The 3-year fixed-rate mortgages eased from 3.9 percent in the 4th quarter of 215 to 3.7 percent in the first quarter of 216. The 1-year Treasury fell to 1.92 percent which is the lowest rate after 212. Rates are likely to remain low through the spring as the market deals with international instability and mixed signals for the domestic economy. NAR is now forecasting fewer rate hikes by the FED in 216 and as a result the 3-year fixed rate mortgage is now expected to average just 4.3 percent for 216.

6.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: NAR REALTOR Price Expectations Texas 216 - Apr 3.7% 3.8% Prior 12 months 3.9% 3.9% REALTORS expect weaker price growth in Texas than in the in the next 12 months. Their price expectations for the local market are more modest than a year ago.

Area Local Market Report, Fourth Quarter 215 Today's Market $18, $16, $14, $12, $1, $8, $6, $4, $2, $ Median Price (Red Line) and One-year Price Growth 26 27 28 29 21 211 212 213 214 215 2% 15% 1% 5% % -5% Local Price Trends Price Activity Current Median Home Price (215 ) $155,5 1-year (4-quarter) Appreciation (215 ) 9.3% 3-year (12-quarter) Appreciation (215 ) 26.1% 3-year (12-quarter) Housing Equity Gain* $32,2 7-year (28 quarters) Housing Equity Gain* NA 9-year (36 quarters) Housing Equity Gain* NA *Note: Equity gain reflects price appreciation only $221,67 6.5% 23.6% $42,233 $4,3 $1,633 Local Trend Prices continue to grow relative to last year Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 37% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 216 NAR Regional Vice President representing region 1 is Matthew Ritchie.

Benefits of Ownership: Total Equity Appreciation $7, Total Equity Accrued to Owner by Year and Quarter of Purchase $6, $57,931 $5, $4, $3, $2, $15,496 $1, $ 22 24 26 28 21 212 214 Total Equity Gained** through 215 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $15,496 $16,784 3-year (12-quarter)* $39,23 $52,129 5-year (2-quarter)* $56,697 $62,764 7-year (28 quarters)* NA $52,66 9-year (36 quarters)* NA $16,571 If purchase in 25, the national price peak NA $11,14 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Dec) 12-month Job Change (Nov) 36-month Job Change (Dec) Current Unemployment Rate (Dec) Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 3 4 2,7 3.5% 3.4%.4% Not Comparable Not Comparable Not Comparable 5.% 5.6% 2.1% Employment growth has eased, but remains positive Unemployment has risen since the same period last year, but 's labor market has been more resilient than the national average Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resour 8.8% 6.1 Natural 4.9% Natural Natural Resources/ #N/A #N/A Resources/ #N/A #N/A Mining/Con Mining/Con struct #N/A #N/A struct Manufacturi #N/A #N/A Governmen Governmen 4.9% 8.8% ng Other t Manufacturing t 4.2% 2.9 4.2% Manufac8.7% Services 15.5% 17.9% 4.% Trade/Transpo Other 18.7% 13 Leisure Trade/T & 19.1% Information Services Trade/Trans 1.7% 1.2 Hospitality Informa1.9% 4.2% portation/uti 1.4% lities Financial Act 5.2% 3.6 Financi 5.8% Leisure & 18.7% Prof. Hospitality & Busin 8.2% 5.7 Profess13.9% 12.1% Information Educ. & Heal 19.2% 13.4 1.7% Educat 15.8% Educational Leisure & Ho 12.1% 8.4 Financial Leisure1.4% & Health Other Service Educ. 4.2% & 2.9Prof. & Activities Other Services S4.% Business 5.2% Professiona Health 15.8% Government 17.9% 12.5 Services91.2% Govern15.5% 1.% l & Services #N/A #N/A 8.2% Business 19.2% #N/A #N/A Services #N/A #N/A #N/A #N/A 13.9% 12-month Employment Change by Industry in the Area (Dec - 215) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA 2 NA NA 1 Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.7% 1 3 2 Trade/Tran sportation/ Utilities 19.1% Information 1.9% Financial Activities 5.8% Trade/Transportation/Utilities -6 Government State Economic Activity Index Texas 12-month change (215 - Dec) 36-month change (215 - Dec) 2.5% 12.9% 3.2% 1.6% Texas's economy is growing, but decelerated from last month's 2.75% change and lags the rest of the nation

Local Fundamentals 12-month Sum of 1-unit Building Permits through Dec 215 New Housing Construction 3 not comparable The current level of construction is 29.1% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Dec 215) 12-month sum vs. a year ago 232 7.9% not comparable 9.7% Production above trend for an extended period of time could cause prices to moderate as inventory is built Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 4 35 3 25 2 15 1 5 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1997 1999 21 23 25 27 29 211 213 215 Monthly Mortgage Payment to Income Ratio for 215 Ratio for 215 8.1% 8.3% 15.6% 15.1% Weak by local standards, but better than the third quarter of 215 Historical Average 7.9% 19.5% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 214 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 214 214 214 215 215 215 215 Median Home Price to Income Ratio for 215 1.4 Ratio for 215 1.5 Historical Average 1.3 2.8 2.7 2.7 The price-to-income ratio eased, but could be better Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1997 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1999 21 23 25 27 29 211 213 215 The Mortgage Market 28 24 2 16 12 8 4 21 3-year Fixed Mortgage Rate and Treasury Bond Yield 211 212 213 214 215 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) Despite indications of economic strength early in the 4th quarter, the Federal Reserve held of its much anticipated rate increases until mid-december. However, a fresh set of weak economic numbers centered on a slowing Chinese economy, excess oil, and the potential impacts on domestic oil exploration and manufacturing softened domestic economic growth in the 4th quarter. As a result, Treasuries slumped as investors moved money into this safe haven and mortgage rates benefited. The average 3-year fixed rate mortgage eased modestly from 4. percent in the 3rd quarter to 3.9 percent in the 4th. The 1-year Treasury did not fall as much MBS and as a result the spread between them eased from 173 basis points to 171. While mortgage rates remained cheap, lenders were hit with the implementation of the new TILA-RESPA Integrated Disclosure rules (TRID) on October 3rd. Some lenders struggled to comply and a result roughly 1 percent of settlements were delayed by roughly 8 days on average, though few were canceled. Rates are likely to remain low through the spring as the market deals with international instability and the FED pulls back from planned rate hikes, but some lenders may continue to have issues with the new settlement procedures. NAR is now forecasting fewer rate hikes by the FED in 216 and as a result the 3-year fixed rate mortgage is now expect to average just 4.3 percent for 216, down from earlier estimates near 5. percent.

6.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: NAR REALTOR Price Expectations Texas 215 - Dec 3.1% 3.3% Prior 12 months 3.9% 3.4% REALTORS expect weaker price growth in Texas than in the in the next 12 months. Their price expectations for the local market are more modest than a year ago.

Area Local Market Report, First Quarter 215 Today's Market $16, Median Price (Red Line) and One-year Price Growth 2% $14, $12, 15% $1, $8, $6, 1% 5% $4, $2, % $ 26 27 28 29 21 211 212 213 214 215-5% Local Price Trends Price Activity Current Median Home Price (215 ) $145,7 1-year (4-quarter) Appreciation (215 ) 16.% 3-year (12-quarter) Appreciation (215 ) 25.1% 3-year (12-quarter) Housing Equity Gain* $29,2 7-year (28 quarters) Housing Equity Gain* NA 9-year (36 quarters) Housing Equity Gain* NA *Note: Equity gain reflects price appreciation only $23,867 6.7% 28.8% $45,533 $5,333 -$13,67 Local Trend Prices continue to grow relative to last year Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 35% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 215 NAR Regional Vice President representing region 1 is Bill Jones.

Benefits of Ownership: Total Equity Appreciation $5, $45, $4, $35, $3, $25, $2, $15, $1, $5, Total Equity Accrued to Owner by Year and Quarter of Purchase $ 22 24 26 28 $ 21 212 $21,998 214 Total Equity Gained** through 215 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $21,998 $15,753 3-year (12-quarter)* $35,11 $53,565 5-year (2-quarter)* $42,92 $47,444 7-year (28 quarters)* NA $17,2 9-year (36 quarters)* NA $1 If purchase in 25, the national price peak NA $16,323 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Mar) 12-month Job Change (Feb) 36-month Job Change (Mar) Current Unemployment Rate (Mar) 1,4 1,9 2,8 3.7% Not Comparable Not Comparable Not Comparable 5.5% Employment growth has eased, but remains positive Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 4.6% 2.1% 6.6% 2.1% Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resour 8.7% 6 Natural 5.% Natural Natural Resources/ #N/A #N/A Resources/ #N/A #N/A Mining/Con Mining/Con struct #N/A Governmen #N/A struct #N/A #N/A Governmen 5.% t 8.7% Manufacturi Other t Manufacturing 17.8% 4.2% 2.9 ng Manufac8.7% Services 15.8% 4.2% 4.% Trade/Transpo 18.8% 13 Trade/T 18.8% Other Leisure & Trade/Trans Information Services 1.7% 1.2 Hospitality portation/uti Informa2.% 4.2% 1.6% lities Financial Act 5.3% 3.7 Financi 5.7% Leisure & 18.8% Prof. Hospitality & Busin 7.9% 5.5 Profess13.9% 12.3% Educ. & Heal 19.1% 13.2 Information Educat 15.6% Financial Leisure & Ho 12.3% 8.5 Educational Activities Leisure1.6% & Health Other Service Educ. 4.2% & 2.9 Prof. & 5.3% Other Services S4.% Professiona Health Business 15.6% Government 17.8% 12.3 91.3% Govern15.8% 1.% l & Services Services Business #N/A #N/A 19.1% 7.9% #N/A #N/A Services #N/A #N/A #N/A #N/A 13.9% 12-month Employment Change by Industry in the Area (Mar - 215) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA 3 NA NA 1 Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.7% 1 1 1 7 1 Trade/Tran sportation/ Utilities 18.8% Information 2.% Financial Activities 5.7% Trade/Transportation/Utilities Government -1 State Economic Activity Index Texas 12-month change (215 - Mar) 36-month change (215 - Mar) 4.3% 13.2% 3.4% 9.3% Texas's economy is stronger than the nation's, but slowed from last month's 4.55% change

Local Fundamentals 12-month Sum of 1-unit Building Permits through Mar 215 New Housing Construction 275 not comparable The current level of construction is 17.4% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits 234 not comparable Production above trend for an extended period of time could cause prices to moderate as inventory is built Single-Family Housing Permits (Mar 215) 12-month sum vs. a year ago -4.8% 3.1% Construction is down from last year, but appears to have bottomed. 4 35 3 25 2 15 1 5 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1996 1998 2 22 24 26 28 21 212 214 Monthly Mortgage Payment to Income Ratio for 214 Ratio for 215 7.4% 7.3% 15.8% 14.3% Weak by local standards, but better than the fourth quarter of 214 Historical Average 7.3% 2.% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 213 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 213 213 214 214 214 214 215 Median Home Price to Income Ratio for 214 1.3 Ratio for 215 1.3 Historical Average 1.2 2.7 2.6 2.7 The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1996 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1998 2 22 24 26 28 21 212 214 The Mortgage Market 28 24 2 16 12 8 4 21 3-year Fixed Mortgage Rate and Treasury Bond Yield 211 212 213 214 215 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) The headline measure of economic activity, GDP growth, swung from a soft 2.2% in the 4th quarter of 214 to a dismal.2% in the 1st quarter of 215 with some suggesting that the 1st quarter figure would be revised lower. Sharp declines in global fuel prices over the winter impacted the domestic oil industry, while a rapid rise in the value of the dollar impacted domestic manufacturers ability to export and increased competition from importers. As a result, employment in both industries slumped in the first quarter. Compounding these issues was weakness in single family housing starts and construction. Weather was partially to blame, but builder sentiment was weak reflecting a pullback in consumer confidence. While not a recession, this economic soft patch weighed on mortgage rates in the 1st quarter which saw the average 3-year fixed rate fall from 3.97% in the 4th quarter to 3.73% in the 1st quarter of 215. Treasury rates fell by more and a result the spread between the two rose from 169 basis points to 176. Affordability surged on sub-4% mortgage rates that were augmented by a sharp 5 basis point cut to the FHA s annual mortgage insurance premium. NAR Research forecasts the average rate for a 3-year fixed rate mortgage to climb to 4.3% by year end 214 and to average 5.2% in 216 as the Federal Reserve begins to raise short term rates in response to improving domestic and international economic conditions gain steam.

7.% 6.% 5.% 4.% 3.% 2.% 1.%.% REALTOR Price Expectations for the Next 12 Months ( Average in Blue Dashed Line) Source: NAR REALTOR Price Expectations Texas 215 - Mar 3.7% 3.5% Prior 12 months 4.7% 3.5% REALTORS expect higher price growth in Texas than in the in the next 12 months. However, their price expectations for the local market are more modest than a year ago.

Area Local Market Report, Second Quarter 214 Today's Market Median Price (Red Line) and One-year Price Growth $16, 2% $14, $12, 15% $1, $8, $6, 1% 5% $4, $2, % $ 25 26 27 28 29 21 211 212 213 214-5% Local Price Trends Price Activity Current Median Home Price (214 ) $134,1 1-year (4-quarter) Appreciation (214 ) 3.1% 3-year (12-quarter) Appreciation (214 ) 14.7% 3-year (12-quarter) Housing Equity Gain* $17,2 7-year (28 quarters) Housing Equity Gain* NA 9-year (36 quarters) Housing Equity Gain* NA *Note: Equity gain reflects price appreciation only $212,267 4.6% 25.8% $43,6 -$11,5 -$8, Local Trend Prices are up from a year ago, but price growth is slowing Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 32% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 214 NAR Regional Vice President representing region 1 is David McKey.

Benefits of Ownership: Total Equity Appreciation $35, $3, $25, $2, $15, Total Equity Accrued to Owner by Year and Quarter of Purchase $1, $6,199 $5, $ 21 23 25 27 $ 29 211 213 Total Equity Gained** through 214 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $6,199 $12,731 3-year (12-quarter)* $22,47 $51,24 5-year (2-quarter)* NA $48,225 7-year (28 quarters)* NA $1,75 9-year (36 quarters)* NA $5,43 If purchase in 25, the national price peak NA $5,43 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Jun) 12-month Job Change (May) 36-month Job Change (Jun) Current Unemployment Rate (Jun) 1, 9 1,9 4.4% Not Comparable Not Comparable Not Comparable 6.1% Employment has held up and is on an upward trend Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 5.7% 1.5% 7.5% 1.7% Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resour 8.3% 5.6 Natural 5.2% Natural Natural Resources/ Resources/ #N/A #N/A #N/A #N/A Mining/Con Mining/Con struct #N/A Governmen #N/A struct #N/A #N/A Governme 8.3% Manufacturi Other 5.2% t nt Manufacturing 4.% 2.7 ng Manufac8.8% Services 18.2% 14.9% 4.% 4.% Trade/Transpo 19.% 12.8 Leisure Trade/T & 19.1% Other Trade/Tran Hospitality Information Services 1.8% 1.2 sportation/u Informa1.9% 11.1% 4.3% tilities Financial Act 5.6% 3.8 19.% Financi 5.8% Leisure & Prof. Hospitality & Busin 8.3% 5.6 Profess14.% 11.6% Educ. & Heal 19.% 12.8 Information Educat 15.2% 1.8% Financial Educational Leisure & Ho 11.6% 7.8 Activities Leisure11.1% & Health Other Service Educ. 4.3% & 2.9 Prof. & 5.6% Other Services S4.% Business Profession Health 15.2% Government 18.2% 12.3 Services 91.7% Govern14.9% 1.% al & Services #N/A #N/A 8.3% Business 19.% #N/A #N/A Services #N/A #N/A #N/A #N/A 14.% 12-month Employment Change by Industry in the Area (Jun - 214) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA 1 NA NA Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.8% 4 1 2 2 Trade/Tran sportation/ Utilities 19.1% Information 1.9% Financial Activities 5.8% Trade/Transportation/Utilities 1 Government -1 State Economic Activity Index 12-month change (214 - Jun) 36-month change (214 - Jun) Texas 4.7% 13.7% 3.2% 9.2% The economy of Texas has outpaced the rest of the nation and improved modestly from last month's 4.41% change

Local Fundamentals 12-month Sum of 1-unit Building Permits through Jun 214 New Housing Construction 274 not comparable The current level of construction is 15.% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits 238 not comparable Production above trend for an extended period of time could cause prices to moderate as inventory is built Single-Family Housing Permits (Jun 214) 12-month sum vs. a year ago -.4% 6.4% Construction continues to decline from last year 4 35 3 25 2 15 1 5 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1995 1997 1999 21 23 25 27 29 211 213 Monthly Mortgage Payment to Income Ratio for 213 Ratio for 214 7.2% 7.8% 14.9% 16.1% Weak by local standards and could weigh on demand Historical Average 7.4% 2.3% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 212 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 212 213 213 213 213 214 214 Median Home Price to Income Ratio for 213 1.3 Ratio for 214 1.3 Historical Average 1.3 2.6 2.7 2.7 The price-to-income ratio is high by historic standards and getting worse Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1995 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1997 1999 21 23 25 27 29 211 213 The Mortgage Market 28 24 2 16 12 8 4 29 3-year Fixed Mortgage Rate and Treasury Bond Yield 21 211 212 213 214 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) Despite the continued wind-down of the Federal Reserve s MBS and Treasury purchase program, mortgage rates remain low. The program was averaging $4 billion in purchases monthly of MBS issued by Ginnie Mae, Fannie Mae and Freddie Mac as well as $45 billion in US Treasury bonds prior to the taper. The intent was to place downward pressure on the long-term borrowing costs. Rates were anticipated to rise as the Fed withdrew its support. However, GDP fell sharply in the 1st quarter, outpacing already weak expectations for the quarter. Furthermore, continued instability in Europe with the conflict in Ukraine heating up as well as volatility in the Israel, Syria, and Iraq, coupled with lingering questions about the veracity of the US economy have kept rates low. Rates averaged roughly 4.25% in the 2nd quarter of 214. The Fed will continue to taper its new purchases of MBS through the late summer ending this portion of the program in October. The Fed will continue to reinvest the principle of MBS and Treasuries indefinitely, though, which is supportive of the market. Rates will likely be more volatile in response to economic news without the robust Fed purchase volume or nascent expansion of private demand for agency MBS. Eventually, a stronger economy, be it robust or modest in nature, will drive up rates over the long-term. NAR is forecasting an average 3-year fixed rate of 4.5% for 214, but to be 4.8% in the 4th quarter of 214 and to average 5.3% for 215.

Area Local Market Report, First Quarter 214 Today's Market Median Price (Red Line) and One-year Price Growth $16, 2% $14, $12, 15% $1, $8, $6, 1% 5% $4, $2, % $ 25 26 27 28 29 21 211 212 213 214-5% Local Price Trends Price Activity Current Median Home Price (214 ) $125,6 $191,567 1-year (4-quarter) Appreciation (214 ) 4.2% 8.9% 3-year (12-quarter) Appreciation (214 ) 13.9% 21.3% 3-year (12-quarter) Housing Equity Gain* $15,3 $33,633 7-year (28 quarters) Housing Equity Gain* NA -$22,533 9-year (36 quarters) Housing Equity Gain* NA -$8, *Note: Equity gain reflects price appreciation only Local Trend Prices continue to grow relative to last year Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 3% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 214 NAR Regional Vice President representing region 1 is David McKey.

Benefits of Ownership: Total Equity Appreciation $25, Total Equity Accrued to Owner by Year and Quarter of Purchase $2, $15, $1, $7,2 $5, $ 21 23 25 27 $ 29 211 213 Total Equity Gained** through 214 from quarter in which home was of purchased Price Activity Local Trend 1-year (4-quarter) $7,2 $18,699 3-year (12-quarter)* $2,126 $4,543 5-year (2-quarter)* NA $33,789 Price appreciation and principle payments in the last 3 years have 7-year (28 quarters)* NA $1,26 boosted total equity growth since the 9-year (36 quarters)* NA $3,658 recession If purchase in 25, the national price peak NA $3,658 *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Mar) 12-month Job Change (Feb) 36-month Job Change (Mar) Current Unemployment Rate (Mar) 8 7 1,6 4.2% Not Comparable Not Comparable Not Comparable 6.7% Employment has held up and is on an upward trend Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 5.% 1.2% 7.5% 1.7% Local employment growth is poor and needs to improve Area Share of Total Employment by Industry Natural Resour 8.2% 5.5 Natural 4.9% Natural Natural Resources/ Resources/ #N/A #N/A #N/A #N/A Mining/Con Mining/Con struct #N/A #N/A struct #N/A #N/A Governme Governmen 8.2% Manufacturi 4.9% Manufacturing 4.% 2.7 ng Other nt t Manufac8.7% 4.% Services 16.1% 18.7% Trade/Transpo 18.8% 12.6 Trade/T 4.% 18.8% Other Trade/Tran Leisure & Information Services 1.8% 1.2 sportation/u Hospitality Informa1.9% 4.2% tilities 1.5% Financial Act 5.7% 3.8 18.8% Financi 5.7% Leisure & Prof. Hospitality & Busin 7.9% 5.3 Profess13.8% 11.5% Educ. & Heal 19.3% 12.9 Information Educat 15.6% Financial 1.8% Educational Leisure & Ho 11.5% 7.7 Activities Leisure1.5% & Health Other Service 4.2% Educ. & 2.8 Prof. & 5.7% Other Services S4.% Profession Government Health Business 18.7% 12.5 91.8% Govern16.1% 15.6% 1.% al & Services Services Business #N/A #N/A 19.3% 7.9% #N/A #N/A Services #N/A #N/A #N/A #N/A 13.8% 12-month Employment Change by Industry in the Area (Mar - 214) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA 1 NA NA Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.7% 1 1 1-2 3 1 Trade/Tran sportation/ Utilities 18.8% Information Financial 1.9% Activities 5.7% Trade/Transportation/Utilities 3 Government -1 State Economic Activity Index 12-month change (214 - Mar) 36-month change (214 - Mar) Texas 4.4% 13.9% 2.9% 8.8% The economy of Texas has outpaced the rest of the nation and improved modestly from last month's 4.19% change

Local Fundamentals 12-month Sum of 1-unit Building Permits through Mar 214 New Housing Construction 289 not comparable The current level of construction is 21.2% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Mar 214) 12-month sum vs. a year ago 238 18.9% not comparable 14.2% Production above trend for an extended period of time could cause prices to moderate as inventory is built Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 4 35 3 25 2 15 1 5 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1995 1997 1999 21 23 25 27 29 211 213 Monthly Mortgage Payment to Income Ratio for 213 Ratio for 214 7.2% 7.4% 14.9% 14.8% Weak by local standards and could weigh on demand Historical Average 7.4% 2.3% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 212 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 212 212 213 213 213 213 214 Median Home Price to Income Ratio for 213 Ratio for 214 1.3 1.2 Historical Average 1.3 2.6 2.5 2.7 The price-to-income ratio rose, but is better than the historic average Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1995 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1997 1999 21 23 25 27 29 211 213 The Mortgage Market 28 24 2 16 12 8 4 29 3-year Fixed Mortgage Rate and Treasury Bond Yield 21 211 212 213 214 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) The Federal Reserve continued to taper its support for the housing market in the first quarter of 214 at a pace of $5b fewer GSE MBS and Treasuries purchased each month. Over the prior year the Fed had purchased roughly $45 billion a month of mortgage backed securities from the GSEs and Ginnie Mae as well as 1-year Treasury bonds. These purchased pushed up on MBS prices, which in turn pushed mortgage rates lower. While the taper had a modest initial upward lift on rates, negative economic news, including weak employment gains, a decline in home sales and instability in Europe, more than offset the upward drift. What's more, the Fed still remains the dominant player in the market for MBS as the total volume of MBS has fallen faster than the rate of Fed purchases due to the sharp drop in refinancing in recent quarters. As a result, mortgage rates remained stable in the first quarter. The Fed will continue to taper through the spring which will have a moderate impact on rates so long as the economy remains in low gear and investor demand for agency MBS re-emerges. Eventually, a stronger economy, be it robust or modest in nature, will reemerge and the Fed's purchases will decline to a level that truly reduces it support for the market so rates will rise later this year. NAR is forecasting an average 3-year fixed rate of 4.7% for 214, but to be 5.1% in the 4th quarter.

Area Local Market Report, Fourth Quarter 213 Today's Market Median Price (Red Line) and One-year Price Growth $16, 2% $14, $12, 15% $1, $8, $6, 1% 5% $4, $2, % $ 24 25 26 27 28 29 21 211 212 213-5% Local Price Trends Price Activity Current Median Home Price (213 ) $123,5 $197, 1-year (4-quarter) Appreciation (213 ).2% 1.2% 3-year (12-quarter) Appreciation (213 ) 14.8% 16.% 3-year (12-quarter) Housing Equity Gain* $15,9 $27,133 7-year (28 quarters) Housing Equity Gain* NA -$22,4 9-year (36 quarters) Housing Equity Gain* NA -$1,9 *Note: Equity gain reflects price appreciation only Local Trend Prices are up from a year ago, but price growth is slowing Information on the long-term trend is not available Conforming Loan Limit** $417, $625,5 Most buyers in this market have access FHA Loan Limit $271,5 $625,5 to government-backed financing Local Median to Conforming Limit Ratio 3% not comparable Note: limits are current and include the changes made in November of 212 and extended in November of 213 Local NAR Leadership The market is part of region 1 in the NAR governance system, which includes all of Louisiana and Texas. The 214 NAR Regional Vice President representing region 1 is David McKey.

Benefits of Ownership: Total Equity Appreciation $25, Total Equity Accrued to Owner by Year and Quarter of Purhcase $2, $15, $1, $5, $2,4 $ 2 22 24 26 $ 28 21 212 Total Equity Gained** through 213 from quarter in which home was of purchased Price Activity 1-year (4-quarter) $2,4 $21,357 3-year (12-quarter)* $2,949 $35,14 5-year (2-quarter)* NA $26,921 7-year (28 quarters)* NA $9,428 9-year (36 quarters)* NA $9,859 If purchase in 25, th enational price peak NA $15,42 Local Trend Price appreciation and principle payments in the last 3 years have boosted total equity growth since the recession *Note: Equity gain reflects price and principle payments since purchase, prevailing 3-year fixed rate mortgage at time of purchase and a 1% downpayment. Downpayment is not included in total equity

Drivers of Local Supply and Demand Local Economic Outlook 12-month Job Change (Dec) 12-month Job Change (Nov) 36-month Job Change (Dec) Current Unemployment Rate (Dec) 1,3 1,6 3, 4.4% Not Comparable Not Comparable Not Comparable 6.7% Employment growth has eased, but remains positive Unemployment in is better than the national average and improving Year-ago Unemployment Rate 1-year (12 month) Job Growth Rate 4.7% 1.9% 7.9% 1.7% Local employment growth is strong compared to other markets Area Share of Total Employment by Industry Natural Resour 8.4% 5.8 Natural 4.7% Natural Natural Resources/ #N/A #N/A Resources/ #N/A #N/A Mining/Con Mining/Con Governmen struct #N/A #N/A struct #N/A #N/A Governme t 8.4% Manufacturi 4.7% Manufacturing 18.3% Other nt 3.9% 2.7 ng Manufac8.8% Services 16.% 3.9% Trade/Transpo 19.2% 13.2 Trade/T 4.% 19.2% Other Trade/Tran Leisure & Information Services 1.7% 1.2 sportation/u Hospitality Informa1.9% 3.8% tilities 1.2% Financial Act 5.5% 3.8 Financi 5.8% Leisure & 19.2% Prof. Hospitality & Busin 8.4% 5.8 Profess13.7% 1.8% Information Educ. & Heal 19.9% 13.7 Educat 15.6% 1.7% Educational Leisure & Ho 1.8% 7.4 Financial Leisure1.2% & Health Other Service Educ. 3.8% & 2.6 Prof. & Activities Other Services S4.% Health Business Profession 5.5% 15.6% Government Services 18.3% 12.6 Services 91.6% Govern16.% 1.% al & #N/A 19.9% #N/A 8.4% Business #N/A #N/A Services #N/A #N/A #N/A #N/A 13.7% 12-month Employment Change by Industry in the Area (Dec - 213) Goods Producing Natural Resources/Mining/Construction Natural Resources and Mining Construction Manufacturing NA 5 NA NA Information Financial Activities Prof. & Business Services Educ. & Health Services Leisure & Hospitality Service Providing Excluding Government NA Other Services Manufacturi ng 8.8% 1 4 1 Trade/Tran sportation/ Utilities 19.2% Information 1.9% Financial Activities 5.8% Trade/Transportation/Utilities 3 Government -1 State Economic Activity Index Texas 12-month change (213 - Dec) 36-month change (213 - Dec) 3.% 11.7% 3.1% 8.9% Texas 's economy is growing, but decelerated from last month's 3.15% change and lags the rest of the nation

Local Fundamentals 12-month Sum of 1-unit Building Permits through Dec 213 New Housing Construction 28 not comparable The current level of construction is 17.6% above the long-term average 8-year average for 12-month Sum of 1-Unit Building Permits Single-Family Housing Permits (Dec 213) 12-month sum vs. a year ago 238 2.2% not comparable 2.2% Production above trend for an extended period of time could cause prices to moderate as inventory is built Construction is on the rise relative to last year, suggesting that the local inventory has stabilized 4 35 3 25 2 15 1 5 Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line) While new construction is the traditional driver of supply in real estate, foreclosures and short-sales now have a strong impact on inventories, particularly at the local level. Rising inventories, through construction or distressed sales, place downward pressure on the median home prices. 6.% State Total Foreclosure Rate vs. U.S Average ( Average in Blue Dashed Line) 5.% 4.% 3.% 2.% 1.%.% Source: Mortgage Bankers' Association

Affordability Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, Average in Green) 3% 25% 2% 15% 1% 5% % 1995 1997 1999 21 23 25 27 29 211 213 Monthly Mortgage Payment to Income Ratio for 213 Ratio for 213 7.2% 7.2% 14.9% 15.1% Historically strong and an improvement over the third quarter of 213 Historical Average 7.4% 2.3% More affordable than most markets 9% 8% 7% 6% 5% 4% 3% 2% 1% % 212 Recent Trend - Local Mortgage Servicing Cost to Income (Historical Average Shown in Red Dashed Line) 212 212 212 213 213 213 213 Median Home Price to Income Ratio for 213 Ratio for 213 1.3 1.2 Historical Average 1.3 2.6 2.5 2.7 The price-to-income ratio has fallen and is below the historical average Affordable compared to most markets

4. 3.5 3. 2.5 2. 1.5 1..5. 1995 Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, Average in Green) 1997 1999 21 23 25 27 29 211 213 The Mortgage Market 28 24 2 16 12 8 4 28 3-year Fixed Mortgage Rate and Treasury Bond Yield 29 21 211 212 213 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% Spread (left axis) 3-Year FRM (Right axis) 1-Year Treasury Bond (Right Axis) Mortgages rates eased through the end of September and early October following Ben Bernanke s announcement in late September that the Federal Reserve would not taper its purchases of mortgage backed securities and US Treasuries. The downward trend reached a low of 4.1% for the average 3-year fixed rate mortgage, but was briefly interrupted by the debt ceiling debate which pushed up modestly on rates in mid-october. However, following a spate of positive economic news releases in November including stronger than expected retails sales and a surprise jump in new employment as well as positive revisions to the measure for employment gains in September and October, the chairman of the Federal Reserve board voted to begin the taper in December. As a result, mortgage rates rose steadily in December and ended the year at 4.48%. The Fed has since continued its taper despite softening economic and employment data. The taper is likely priced in but the weak economic news is holding back higher rates. A stronger economy, be it robust or modest in nature, is inevitable so rates will rise later this year. NAR is forecasting an average 3- year fixed rate of 5.% for 214.

Abilene Area Local Market Report, First Quarter 2017