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40 INVENTORY OF EXISTING HOME LISTINGS CONTINUES TO FALL SHORT S&P Dow Jones Indices (S&P DJI) has released the latest results for the S&P CoreLogic Case-Shiller Indices for August 2021, showing that home prices continue to increase across the nation. Before seasonal adjustment, the U.S. National Index posted a 1.2% month-over-month increase in August, while the 10-City and 20-City Composites both posted increases of 0.8% and 0.9%, respectively. e S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.8% annual gain in August, remaining the same as the previous month. e 10-City Composite annual increase came in at 18.6%, down from 19.2% in the previous month. e 20-City Composite posted a 19.7% year-over-year gain, down from 20.0% in the previous month. "e U.S. housing market showed continuing strength in August 2021," said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. "Every one of our city and composite indices stands at its all-time high, and year- over-year price growth continues to be very strong, although moderating somewhat from last month's levels." After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.4%, and the 10-City and 20-City Composites both posted increases of 0.9% and 1.2%, respectively. In August, all 20 cities reported increases before and after seasonal adjustments. "We have previously suggested that the strength in the U.S. housing market is being driven in part by a reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes," said Lazzara. "More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred anyway over the next several years, or reflects a secular change in locational preferences. August's data are consistent with either explanation. August data also suggest that the growth in housing prices, while still very strong, may be beginning to decelerate." Phoenix, Arizona; San Diego, California; and Tampa, Florida reported the highest year- over-year gains among the 20 cities in August 2021. Phoenix led the way with a 33.3% year- over-year price increase, followed by San Diego with a 26.2% increase, and Tampa with a 25.9% increase. Eight of the 20 cities reported higher price increases in the year ending August 2021 versus the year ending July 2021. "Going forward, the conditions buyers face are primarily dependent on two things: mortgage rates and housing supply," said Realtor.com Chief Economist Danielle Hale. "e average mortgage rate for a 30-year fixed-rate loan rose 10 basis points from 2.77% to 2.87% in August, and has breached 3.0% with no sign of slowing since then, limiting some buyers' ability to push home prices higher. Further, the availability of homes for sale remains low, as new construction climbs out of a decade-long deficit, and the inventory of existing home listings continues to fall short from 2020 levels. Recently, we've seen trends in new sellers lag behind prior year levels, but the deficit is shrinking. With existing owners hesitating to jump into a housing market tipped so far in sellers' favor, more homes for sale are likely just what buyers and, paradoxically, sellers need." Contributing to the shortage of inventory of existing home listings as noted by Hale is the lack of building supplies, which are being marked up to record highs in some cases. e price of framing lumber hit a record-high of more than $1,500 per thousand board feet in mid-May, according to Random Lengths. e previous record before prices began their ascent at the outset of the pandemic in April 2020 was just below $600 per thousand board feet. Earlier this month, the National Association of Home Builders (NAHB) sent a letter to President Joe Biden seeking assistance with lumber price fluctuations and disruptions in the supply chain of materials. In the letter, NAHB requested three primary initiatives to be taken by the Biden Administration: » Increase efforts volatility in the lumber market, which has seen cash prices climb by more than 25% over the past month; » Address supply chain bottlenecks for building materials and supplies that are causing significant delays and are keeping home prices nearly 20% higher than they were year-over-year; and » Develop a new softwood lumber agreement with Canada that will end tariffs on lumber shipments into the U.S. "Housing demand remains strong and residential construction is projected to remain at its current pace through 2023," said NAHB Chairman of the Board John C. Fowke in Journal

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