House For Sale

With the recent sub-prime mortgage lenders meltdown, many analysts expect more downside risk in the housing market. Home builders keep saying that they cannot tell whether the worst is over yet. They have started reducing the prices and giving incentives.

05-Dec-2008: Home loan troubles break records again. A record 1 in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

04-Dec-2008: Government plans to lower mortgage interest rates to 4.5% by buying mortgage-backed securities issued by Fannie Mae and Freddie Mac.

25-Nov-2008: Federal Reserve will buy mortgage-backed assets up to $600 billion in another attempt to deal with the financial crisis. it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

25-Feb-2008: Sales of existing homes fell for a sixth straight month in January. Sales fell 0.4% to an annual rate of 4.89 million units. The inventory of homes for sale rose 5.5 percent to 4.19 million units at the end of January -- about 10.3 months' supply at the current sales pace. The national median home price fell to $201,100 from $210,900 a year earlier.

06-Feb-2008: Toll Brothers, the largest U.S. luxury home builder, said it sees no sign of improvement in the depressed U.S. housing market.

05-Feb-2008: Centex CEO said on CNBC: "This housing depression is the deepest and longest since WWII."

28-Jan-2008: The Commerce Department reported that sales of new homes dropped by 26.4% last year to 774,000. That marked the biggest decline on record, surpassing the old mark of a 23.1% plunge in 1980.

Earlier reports showed sales of existing homes dropped by 13% last year, the biggest decline since 1982; while construction of new homes and apartments fell by 24.8%, the largest drop since 1980.

05-Dec-2007: The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures. The rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30, 2007, with rates that are scheduled to rise between January 1, 2008, and July 31, 2010.

15-Nov-2007: Wells Fargo's CEO John Stumpf said that the nation's housing slump is the worst since the Great Depression and is far from over.>

17-Oct-2007: The U.S. Commerce Department reported that construction of new homes fell 10.2 percent in September compared to August to a seasonally adjusted annual rate of 1.191 million units. That was the slowest building pace since March 1993. Caterpillar (CAT) Chief Executive Officer James Owens said that the downturn in the U.S. housing market is the worst it has been since World War II. Both U.S. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson warned that the housing downturn was likely to persist longer than had been expected.

10-Sep-2007: Speaking at a Lehman Brothers financial services conference, Washington Mutual CEO Kerry Killinger said that the housing market faces rising delinquencies and foreclosures, higher borrowing costs, tighter underwriting standards and tough capital markets, "creating what we call a near-perfect storm for housing.

28-Aug-2007: Home prices fell 3.2 percent in the second quarter, the steepest rate of decline since its index was started in 1987.

19-Jun-2007: The latest survey saw builder sentiment in June fall to the lowest level in 16 years, since the severe housing downturn in 1991. Builders have been worried about the glut of unsold homes on the market, the rising defaults and now rising mortgage rates as central banks around the world have been raising interest rates to guard against inflation.

Here is a list of well-known U.S. home builders:

• Pulte Homes, Inc. (PHM)
• Centex Corp. (CTX)
• Toll Brothers, Inc. (TOL)
• KB Home. (KBH)
• Ryland Group, Inc. (RYL)
• Hovnanian Enterprises, Inc. (HOV)
• Standard Pacific Corp. (SPF)
• Beazer Homes USA, Inc. (BZH)

The Exchange-Traded Fund (ETF) for home builders is:

• SPDR S&P Homebuilders (XHB)