Monday, August 18, 2008

Housing is Nowhere Near a Bottom

From Bloomberg:

Confidence among U.S. homebuilders was unchanged in August at a record low, signaling there is no relief in sight from the worst housing slump in a quarter century.

The National Association of Homebuilders/Wells Fargo sentiment index held at 16 for a second month, the Washington- based group said today. Readings under 50 mean most respondents view conditions as poor.

Builders are delaying projects as sales drop, foreclosures throw more houses on the market and prices tumble. Job losses, stricter lending rules and growing buyer pessimism indicate builders will need to cut prices further to stimulate demand.

And why should they be anything except really bummed by the future?

KB Homes: Loss in 2007; last four quarters, losing money.

Centex: Lost money for the last four quarters.

Hovnanian: Four quarters of losses

Lennar: Four quarters of losses

Am I the only one seeing a pattern here? These are terrible numbers. And there is no reason to expect it to get any better.

Questions on residential real estate lending. Large majorities of domestic respondents reported having tightened their lending standards on prime, nontraditional, and subprime residential mortgages over the previous three months. About 75 percent of domestic respondents—up from about 60 percent in the previous survey—indicated that they had tightened their lending standards on prime mortgages.2 Of the 32 respondents that originated nontraditional residential mortgage loans, about 85 percent—up from about 75 percent in the April survey—reported having tightened their lending standards on such loans.3 Finally, 6 of the 7 respondents that originated subprime mortgage loans—a somewhat higher proportion than in the April survey—indicated that they had tightened their lending standards on those loans over the past three months.4

I can't wait to see how the perennial bottom callers will spin this into happy news.