Highly visible problems in the housing finance system are contributing to a wait-and-see attitude among prospective home buyers and reducing builder confidence in the single-family housing market, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI declined two points to 22 in August, its lowest level since January 1991.
“Builders realize that issues related to mortgage credit cost and availability have become more acute, filtering some prospective buyers out of the market and prompting others to delay their decision to purchase a new home,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif. “Builders are responding by trimming prices and stepping up non-price incentives to bolster sales and limit cancellations, although we’re dealing in a difficult market environment.”
“There is no question that problems in the subprime mortgage sector have spilled over to other components of housing finance, including the Alt.-A and jumbo markets, delaying a revival of the single-family housing market,” added NAHB Chief Economist David Seiders. “However, the government-related parts of the mortgage market still are functioning well and the underlying economic fundamentals promise to remain solid for some time – providing support to the longer-run housing outlook. We now expect to see home sales return to an upward path by early next year and we expect housing starts to begin a gradual recovery process by mid-2008. From there, the market will have plenty of room to grow in 2009 and beyond.”
The last paragraph is pretty laughable. Lenders have tightened their lending standards. The inventory of new and existing homes stand near all time highs and the mortgage market is generally a really big mess right now. While the credit markets might be better by early 2008, I don't see lending standards loosening up anytime soon. This lowers the number of buyers in an already over-supplied market. I think early 2008 is way too optimistic.
2 comments:
I'm watching the markets tank in real time. The lines are almost straight down verticals at 20:14 GST (3:15pm EST). This is getting seriously ugly.
What is really scary is that once the rest of the world figures out that the US establishment defrauded it into buying worthless paper for most of the past five years, they won't touch US finance again for decades. Given the US reliance on foreign finance, that implies some serious reconfiguration of US consumption habits to actually live within their means. And means will be reduced by a nasty recession and credit crunch with a spike in unemployment.
Bad stuff happening now. We've both been expecting it for a long time. Now that it's here, I'm scared to know how bad it will be.
" What is really scary is that once the rest of the world figures out that the US establishment defrauded it into buying worthless paper for most of the past five years, they won't touch US finance again for decades. "
will anybody be held criminally responsible ??
from what i have been reading is that this whole hedge fund / subprime thing has been one big Ponzi scheme.
Post a Comment