The housing industry continues to struggle with rising loan defaults and slow sales: (1) IndyMac, a top-10 U.S. mortgage lender, said it now expects Q4 earnings of $0.97/share (Jan. 25), down from its original forecast of $1.30-1.40 and $1.06 last year. IndyMac blamed its shortfall on 
higher provisions for defaults, repurchases of soured loans earlier sold to investors, declines in loan values, and a margin squeeze between its funding costs and the interest rates it receives from borrowers. Shares were down $3.05 (7%) to $40.50. (2) Homebuilder Centex said it expects a loss of $2/share (Jan. 23) for its F-Q3, vs. $2.37 last year. It said it will write down its land value by $300 million and record a $150m loss on options to buy land that are being abandoned, calling the current environment "one of the most challenging" of the last 25 years. Shares dropped $1.55 (2.9%) to $51.61. (3) KB Home, announcing changes in previous estimates, also said it will take a $343 million property charge this quarter. While some economists think we've seen the worst of the housing slump, others take recent developments as a sign of what's to come. Ivy Zelman, housing analyst for Credit Suisse: "There are going to be more negative surprises. I think it's just getting started."
• Sources: Wall Street Journal, LA Times
• Related commentary: Housing Stocks: Is the Worst Over?, More Evidence of the Housing Bottom from the Builders, Seeking Alpha's Housing Bubble and Real Estate Market Tracker
• Potentially impacted stocks and ETFs: Centex Corp. (CTX), IndyMac Bancorp Inc. (NDE), KB Home (KBH). More Homebuilders: Toll Brothers Inc. (TOL), D.R. Horton Inc. (DHI), Lennar Corp. (LEN), Beazer Homes USA Inc. (BZH), Pulte Homes Inc. (PHM). ETFs: iShares Dow Jones US Real Estate (IYR), iShares Cohen & Steers Realty Majors (ICF), SPDR Homebuilders (XHB), iShares Dow Jones US Home Construction (ITB)
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