Not only that, but the dollar continues it's downward slide. Scary stuff
--- In AsburyPark@yahoogroups.com, "dfsavgny" <[EMAIL PROTECTED]> wrote:
>
> Housing Chill
> Grows Worse,
> Bites Consumers
> By SUDEEP REDDY and MICHAEL CORKERY
> September 26, 2007; Page A1
>
> The housing market is going into a deeper chill, and consumers are
> starting to shiver.
>
> Sales of existing homes in August fell sharply, and home inventories
> by one measure soared to an 18-year high, according to data released
> yesterday. One major home builder, D.R. Horton Inc., is auctioning
> homes this weekend with starting prices for some units at 50% off an
> earlier price.
>
> The housing market is worrying consumers, raising fresh concerns about
> economic growth. Consumer confidence fell this month to its lowest
> level in almost two years, a new survey showed. Retailers such as
> Lowe's Cos. and Target Corp. said they're feeling the pain. Both
> reported softer-than-expected sales Monday.
>
> "The combination of all this is indicative of an economy that has lost
> quite a bit of momentum," said Joshua Shapiro, chief U.S. economist at
> the consulting firm MFR Inc., an economic forecasting firm that
> advises investors.
>
> Wall Street seems unconcerned for now. Broad stock indexes moved
> little yesterday, and the Dow Jones Industrial Average is just a few
> hundred points from its all-time high.
>
> Optimists believe the Federal Reserve's aggressive move last week to
> cut interest rates will help keep the economy out of recession. Also,
> exports are rising, thanks to a weaker dollar, and business investment
> is holding up.
>
> Still, the pace of housing's downturn is accelerating, surprising even
> some bearish analysts.
>
> Lennar Corp., the nation's second-largest home builder by market
> value, reported a net loss of $514 million for the quarter ended Aug.
> 31. That was nearly six times the loss Wall Street analysts on average
> had expected, and compared with net income of $207 million a year
> earlier. The company was forced to write down the value of land and
> write off deposits for land it no longer wants to build on. The
> writedowns totaled $847.5 million in the quarter. Lennar said it has
> cut its work force by 35% since last year.
>
> Lennar shares fell 4% and have lost more than half their value this year.
>
> Chief Executive Stuart Miller said the problems are broad-based and
> stem from an oversupply of homes, turmoil in the mortgage market and
> weak consumer confidence. "We have not only not seen evidence of any
> of these items resolving, but instead we have seen further
> deterioration," Mr. Miller told investors and analysts during a
> conference call.
>
> Overall, sales of existing homes tumbled 4.3% in August to an annual
> pace of 5.5 million, the slowest in five years, the National
> Association of Realtors said yesterday. More worrisome: The number of
> homes for sale is enough to satisfy 10 months of demand at the current
> pace. Two years ago the figure was below five months. Analysts cite
> excess supply in forecasting that an upturn in sales and prices may
> not come until 2009.
>
> Home prices in July fell 3.9% from a year earlier, according to the
> S&P/Case-Shiller home-price index. The index, which tracks prices in
> 20 U.S. metropolitan areas, hadn't measured that big of a decline
> since just after the 1990-91 recession.
>
> The bottom is "not yet in sight" for housing, said Mr. Shapiro, the
> economist. He said the growing number of unsold homes "argues for
> accelerating declines of prices."
>
> The worsening housing slump and turmoil in the credit markets is
> beginning to take a toll on retailers. Lowe's Chief Executive Robert
> Niblock, addressing analysts and investors at a conference in
> Charlotte, N.C., yesterday, refused to hazard a guess on when the
> housing slowdown will bottom. "The only thing that is consistent is
> the inaccuracies of the economic forecasts," he said. Late Monday,
> Lowe's reduced its earnings outlook for this year and 2008. Its shares
> fell 6.7% yesterday.
>
> Other well-regarded retailers are missing forecasts. Target on Monday
> lowered its estimate for September sales. In August, Costco Wholesale
> Corp.'s sales at stores open at least a year rose just 1%, much lower
> than its original forecast. It cited weakness in California, which has
> been hard-hit by the housing slowdown. Target mentioned soft sales in
> the Northeast and Florida.
>
> The Conference Board said yesterday that its index of consumer
> confidence dropped to 99.8 in September from 105.6 in August, putting
> it at the lowest point since November 2005. The survey ended on Sept.
> 18, the day the Fed lowered interest rates by half a percentage point.
> The share of consumers reporting jobs as "hard to get" rose to 22.1%
> from 19.7%.
>
> "Looking ahead, little economic improvement is expected," said Lynn
> Franco, who directs the Conference Board survey.
>
> Builders are divided on how drastically to cut prices to put a dent in
> supply. Earlier this month, Hovnanian Enterprises Inc. held a 72-hour
> weekend sale nationwide, dubbed "The Deal of the Century," and offered
> discounts of up to 30% on certain homes. The company sold 2,100 homes
> during the promotion, about 10 times the usual weekly number.
> Hovnanian executives said that demonstrates buyers will come if the
> price is right.
>
> On Saturday, D.R. Horton is using an auction to sell 53 homes in San
> Diego. The starting bid for some units will be as much as 50% lower
> than previous prices, according to the auction Web site. On a
> one-bedroom unit, the starting bid is $149,000, down from a previous
> price of $309,990.
>
> Lennar's Mr. Miller questioned the wisdom of deep discounts, saying
> he's not willing to match some of the incentives offered by
> competitors. He said some recent price cuts were "just unrealistic and
> maybe even ridiculous."
>
> Lennar's average home price nationally declined 6% in the third
> quarter to $296,000 from $316,000 from a year ago. Its average
> incentive per home -- a figure that includes extra amenities and price
> discounts -- increased to $46,000 from $36,000 a year ago.
>
> Individual home owners have been slower than builders to bring down
> their prices to match demand, but that may be changing as the housing
> slump worsens. "The existing-home market is moving much more rapidly
> to adjust downward," Mr. Miller said.
>
> The National Association of Realtors reported yesterday that the
> median national home price was $224,500 in August, up 0.2% from
> $224,000 in August 2006. Those numbers can be skewed by the mix of
> homes sold in a particular month. Economists say the Case-Shiller
> index is less vulnerable to that distortion because it tracks the
> sales of individual homes over time.
>
> Mortgage companies are scaling back loans to people who have poor
> credit or can't document their income, while looking to make more
> loans that can be insured by the Federal Housing Administration.
>
> That trend showed up in Lennar's figures. In the third quarter, 25% of
> buyers using Lennar's in-house mortgage company used an "Alt-A"
> mortgage, a category between prime and subprime that often requires
> little documentation, down from 41% a year earlier. The proportion of
> FHA-insured loans rose to 25% from 12%.
>
> "The days of no verification, no down payment and low credit scores
> are past," said Lennar's chief financial officer, Bruce Gross.
>
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