Powerpoint Presentation on local and national economic data for residential builders. Presented at the Cape Fear/Wilmington Builders\' Association Meeting.

1. Economic Outlook Wilmington-Cape Fear HBA Wilmington, NC June 19, 2008 Douglas McWilliam Vice President- Secondary Marketing Relationship Manager Wachovia Corporate & Investment Bank

3. National Economic Overview

5. U.S. Economic Overview Surging Energy Prices And The Still Unfolding Housing Slump Have Pushed The Economy Over The Edge National Economic Overview Wachovia U.S. Economic Forecast Depending on oils ripple effect Depending on the dollar

11. Timeline of a Financial Crisis A Crisis Timeline: Eight Months of Fed Maneuvering Source: American Banker and Wachovia Corp. National Economic Overview The Fed will continue to innovate until financial markets stabilize

12. Results of the current credit crisis MBS to Treasury Price Spreads

13. Residential Real Estate Summary

15. Homebuilders Permits in the worst housing markets are rapidly approaching or are already essentially at near zero levels. Some states have seen permits decline more than 80 percent from their peak levels. Permits did bounce higher in April for the first time since last Spring. Like starts, we think that the declines are mostly behind us, but would not rule out a few more small declines this summer. Much more of today’s decline in single-family permits is due to deteriorating credit conditions than to oversupply. The builder inventory of unsold homes has fallen considerably, even in massively overbuilt markets like Florida, California, and Arizona Permits Are Rapidly Approaching Zero in Many Markets

16. Homebuilders

19. Homebuilders

21. Homebuilders

23. Homebuilders Mortgage Applications Applications Slide Anew Applications for purchase have renewed their downward trend amid tighter credit standards. Declining home values have also kept many potential buyers on the sidelines and significantly cut into demand for second homes. Demand for adjustable rate mortgages has cooled considerably, despite a steeper yield curve, as reports about homeowners struggling with some ARM products circulate. Consumers are now opting for more traditional products. Applications for mortgage refinancing have fallen even more significantly, reflecting higher mortgage rates and tighter underwriting. Highlights

24. Homebuilders Figure 2 Figure 3 Source: Mortgage Bankers Association and Wachovia Corp.

25. Homebuilders 6.75 as of 06/16/08

26. Homebuilders

27. OFHEO OFHEO Home Price Index Home Prices Are Now Falling in the Majority of American Cities Source: OFHEO and Wachovia Corp. Wachovia

28. Investor & Second-Home Mortgages Non-Owner Occupied Purchase Loans: 2006 Investors Were Responsible For More than Half of the Purchases in Some Markets in 2006 Source: HMDA and Wachovia Corp. Residential Real Estate Summary

29. North Carolina

32. Wilmington-Cape Fear HBA Wilmington, NC Our Economics Team

33. Wachovia Economics Group I would like to thank our Wachovia Economics Group Commentary http:// www.wachovia.com/economicsemail [email_address] (704) 374-4407 Economic Analyst Tim Quinlan [email_address] (704) 715-9660 Economic Analyst Adam G. York [email_address] (704) 383-6805 Econometrician Azhar Iqbal [email_address] (704) 715-0575 Economist Anika Khan [email_address] (704) 383-7372 Economist Sam Bullard [email_address] (704) 383-3518 Global Economist Jay H. Bryson, Ph.D. [email_address] (704) 383-5635 Senior Economist Mark Vitner [email_address] (704) 374-7034 Chief Economist John E. Silvia, Ph.D.

34. Event Sponsored by: Lisa Mesler Peter Newman Blair Young 1017 Ashes Drive Suite # 106 Wilmington, NC 28405 Phone: 910.509.2848 Toll Free: 800.272.3439 Thank you! Wilmington-Cape Fear HBA