More Data on Weak House Prices

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

For-Sale Signs Multiply Across U.S. and Home Builders Turn to Discounts, Promotions

• Summary: The WSJ's quarterly survey of the US housing market showed that while there is no sign of a collapse, house prices are falling in some areas, levelling off in others, and the number of homes for sale is rising accross the country. The state of local housing markets is strongly impacted by employment growth. "Metro areas showing large increases of homes for sale and relatively weak employment growth include Boston, Los Angeles, Philadelphia and New York. Among the strongest markets overall are Houston, Dallas-Fort Worth and Seattle. All three areas are benefiting from robust job markets, and modest home prices are drawing investors and new residents to Texas." Separately, home builders are using aggressive promotions to sell new homes. Lennar is giving away free homes in a raffle for new home buyers and slashing prices on others, while several builders including Technical Olympic USA Inc.'s Engle Homes and Lennar "offered "guaranteed pricing," where a home's price would be reduced if pricing has changed by the time the home closes". Hovnanian has been forced to cut prices in Florida and Centex in California.
• Comment on related stocks/ETFs: Interesting to compare the results of this survey to yesterday's data for housing starts. See also Jeffrey Saut's comments on the housing market. More negative data points on the home builders Lennar (LEN), Meritage Homes Corp. (MTH), Hovnanian (HOV), Technical Olympus USA (TOA) and Centex (CTX). Philip Frank outlines the short case on Centex.