Housing Slowdown Continues Apace

Last week, we looked at 4 charts reflecting the general problems facing the housing industry.

Yesterday, WSJ Market Beat reviewed the companies getting pressured by changes in the Housing market:

"Housing stocks are getting hit hard today
after two different companies — Standard Pacific and Technical Olympic USA
warned that demand was slowing and said they expected orders to fall sharply.
Friday, Standard Pacific said orders plummeted 41% in April and May — one of
the biggest such dropoffs reported by a home builder of late. But its
announcement followed similar bad news from Pulte Homes, Hovnanian Enterprises, Ryland Group and luxury
builder Toll Brothers, all of whom
have reported hefty pullbacks in demand and cut earnings guidance for 2006. And
shares of all have dropped since peaking in about mid-January. Coming into
today, the Philadelphia Stock Exchange Housing Index was down 12% this year,
compared with a 3% gain for the S&P 500; the housing index is off 2%

Several analysts said today that Standard Pacific’s announcement
was worse than expected and that the cumulative affect of the industry warnings
suggests real estate could experience more than just a mild decline from
previously lofty heights. "What the industry is going through appears to be much
more brutal than most had anticipated even just a few short months ago," A.G.
Edwards analyst Gregory Gieber wrote in a comment. "Last year, our view was that
it would be a soft landing, but as 2006 started to roll forward our concerns
grew and we abandoned the soft-landing view for one of a ‘sweating-palms or
white-knuckle rough landing.’ But over the past month or so, we have come to
fear that even that revised view was likely too optimistic."

One possible cause for pessimism is an overhang of available
housing. In the past several years, according to the U.S. Census Bureau, about
four months’ worth of supply was available for sale on average, at any given
moment. But in the three months leading up to April, about six months of supply
was available. The National Association of Realtors said last week that its
index of pending home sales fell 3.7% in April and is down 12% from a year

Money Pit
David A. Gaffen    
WSJ MarketBeat, June 5, 2006 11:49 a.m.

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