The document summarizes a study on the implications of the soft housing market for suppliers of building products. It discusses changes in the housing industry due to overproduction and market correction, including builders being more open to innovation. It also outlines opportunities for suppliers to help builders improve sales and construction practices. Key findings from the study include builders being more interested in energy efficiency and improving relationships with subcontractors.

1. Implications of the Soft Housing Market on Suppliers of Building Products CABA’s Internet Home Alliance Research Council Family Ecosystem Forum October 30, 2007 Benton Harbor, MI

3. Completed June 2007 State-of-the-Art Lab & Market Research Facility

5. New Residential Housing Permits Source: U.S. Census Bureau (through September 2007) 2007 2000 2002 2003 2004 2005 2006 2001

6. Source: U.S. Census Bureau (through August 2007)

9. Source: NAHB Research Center, Inc.

10. Source: NAHB Research Center, Inc. Share of respondents rating a 5 on a scale of 1 to 5

11. Share of respondents rating a 5 on a scale of 1 to 5

12. Share of respondents rating a 5 on a scale of 1 to 5

14. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

15. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

18. Source: NAHB Research Center, Inc.

19. Source: NAHB Research Center, Inc. Share of respondents rating a 5 on a 5 point scale

20. Source: NAHB Research Center, Inc. Share of respondents rating a 5 on a 5 point scale

21. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

22. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

24. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

25. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

26. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

28. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

29. Share of respondents rating a 4 or 5 on a 5 point scale

31. Source: NAHB Research Center, Inc.

32. Source: NAHB Research Center, Inc. Share of respondents rating a 4 or 5 on a 5 point scale

33. Residential Improvements and Repairs Expenditures Source: U.S. Department of Commerce Recession Source: U.S. Census Bureau

34. Source: NAHB Research Center, Inc.

35. Change in Size of New Single Family Homes Source: Annual Builder Practices Reports, NAHB Research Center, Inc. 3,620 2,363 1,631 2,420 2006 0% -2% -1% +2% Change 3,608 SFD Luxury 2,410 SFD Move-up 1,651 SFD Starter 2,382 Average SFD 2005

36. Change in Distribution of New Single Family Homes by Price-Point Source: Annual Builder Practices Reports, NAHB Research Center, Inc. 100% 100% 100% Total 21.6% 46.5% 31.9% 2006 +3% -1% -2% Change 18.3% Luxury 47.7% Move-up 34.0% Starter 2005

37. Kitchen Countertop Material Usage in New SFD Homes Source: Annual Builder Practices Reports, NAHB Research Center, Inc. +2% 3% 1% Other natural stone +9% 40% 31% Granite +2% 3% 1% Engineered stone 4% 36% 13% 2006 -4% -4% -4% Change 9% Ceramic Tile 40% Laminate 17% Solid Surfacing 2005

38. Exterior Finish Materials In New SFD Homes Source: Annual Builder Practices Reports, NAHB Research Center, Inc. -0.2% 14.2% 14.4% Fiber Cement -0.3% 22.7% 23.0% Vinyl 21.4% 7.4% 21.2% 2006 -2.8% +1.6% +0.3% Change 24.2% Stucco 5.7% Stone 20.8% Brick 2005

39. Share of New SFD Homes with Home Electronics Systems Source: Annual Builder Practices Reports, NAHB Research Center, Inc. 6% 10% 5% Built-in Home Theater 5% 4% 4% Whole-house Video Access 10% 10% 8% Whole-house Audio System 11% 12% 10% Monitored fire / toxic gas alarm system 1% 1% 1% Communicating Thermostat 2% 4% 2% Lighting control system 21% 19% 20% Monitored Security System 27% 24% 24% Non-Monitored Security System 3% 1% 7% 2005 2% 1% 5% 2006 2% Whole home automation 1% Video Entrance Phone 5% Intercom / Entrance Phone 2004

40. Share of New SFD Homes with Home Electronics Systems Source: Annual Builder Practices Reports, NAHB Research Center, Inc. 15% 4% 1% Built-in Home Theater 15% 2% 2% Whole-house Video Access 27% 7% 5% Whole-house Audio System 23% 9% 7% Monitored fire / toxic gas alarm system 2% 1% 1% Communicating Thermostat 6% 1% 1% Lighting control system 36% 20% 10% Monitored Security System 32% 31% 19% Non-Monitored Security System 1% 1% 5% Moveup 6% 4% 12% Luxury 1% Whole home automation 0% Video Entrance Phone 2% Intercom / Entrance Phone Starter

41. Price per Square Foot for U.S. Homes by Category Source: Annual Builder Practices Reports, NAHB Research Center, Inc. $190 $182 $160 Luxury $124 $104 $135 2005 $134 $108 $148 2006 $114 Moveup $101 Starter $124 All SFD Homes 2004

42. Shares of SFD Homes with Structured Wiring Source: Annual Builder Practices Reports, NAHB Research Center, Inc. 58% 61% 54% Luxury 46% 31% 42% 2005 46% 25% 41% 2006 38% Moveup 31% Starter 39% All SFD Homes 2004

44. Ed Hudson Director, Market Research Division NAHB Research Center 400 Prince George’s Blvd  Upper Marlboro, MD 20774 (toll-free) 800-638-8556  (fax) 301-430-6180 www.nahbrc.org