West is Maybe not the Best - in Real Estate

Housing Industry Continues To Tank

Bad news continued to plague the housing industry in recent days. The Commerce Department’s Census Bureau reported today that in May, U.S. housing starts fell for the first time in four months—down 2.1% from April’s figures, and down 24% from figures of May 2006. The largest drop is in the Western region, which is about 40% below its May 2006 level.

On the subject of foreclosures, a third firm which tracks foreclosures (Foreclosures.com) released their data for May, reporting the highest rate so far. Several stages in the sequence of the foreclosure process are monitored, and notably, although actual final sheriff’s sales of properties are up 42% from a year earlier, the pre-foreclosure stages have gone up 96%, which presages future disaster as those transactions move to the final stage.

All of this is having a predictable effect on home builders. Their trade association, the National Association of Home Builders—which in late 2006 happily agreed in a conference-call with other industry groups that a recovery would begin by the second half of 2007 -- yesterday announced the results of its latest survey (with Wells Fargo) of “builder confidence.” The survey showed a drop in confidence in June, hitting its lowest level since February 1991. “Builders continue to report serious impacts of tighter lending standards on current home sales as well as cancellations, and they continue to trim prices and offer a variety of nonprice incentives to work down sizeable inventory positions,” NAHB quoted its President, Brian Catalde. NAHB’s chief economist said they don’t expect any recovery in their sector ‘til 2008. [GRC]