Tuesday's housing news indicates a continued decline. With 147,708 households in some state of foreclosure in April, a 62% jump from April 2006, and resultant tighter lending standards at almost half the U.S. banks, median house and condominium prices in Q1'07 fell 1.8% to $212,300, a 2-year low. Single family home prices fell in 62 of 145 cities. Sales rose 2.4% from 6.2 million units to 6.41 million in Q4'06, down 6.6% from Q1'06. The National Association of Realtors says prices are stabilizing and projects a late 2007 recovery, but the National Association of Homebuilders/Wells Fargo index returned to September's 15-year low, declining to 30 from 33 in April and showing borrowing difficulties and order cancellations were taking its toll on homebuilder confidence. Economists had predicted a static 33 index reading-- down from last May's 46—but all three index components declined, in three out of four U.S. regions: Single family homes slid from 33 to 31, expectations for the coming half year in sales fell from 44 to 41, and prospective buyer traffic outlook sank from 27 to 23. The Northeast declined the most, from 38 to 32, while the Midwest rose from 22 to 23. The only silver lining: The consumer price index rose 0.2% as expected. Economists point to falling rental costs as the most significant contributor to a possibly stabilizing CPI.
Sources: NAHB Press Release, MarketWatch I, II, III, Bloomberg, Reuters, CNN Money
Commentary: Banks Face Growing Pressure on Home Prices • Sub-Prime Woes Not Spilling Over To Over Other Credit Areas • Housing Bubble and Real Estate Market Tracker
Stocks/ETFs to watch: Toll Brothers (NYSE:TOL), Pulte Homes (NYSE:PHM), Centex (CTX), Beazer Homes (NYSE:BZH), KB Homes (NYSE:KBH), Lennar (NYSE:LEN), Ryland (NYSE:RYL). ETFs: iShares Dow Jones U.S. Home Construction (NYSEARCA:ITB), SPDR Homebuilders (NYSEARCA:XHB), PowerShares Dynamic Building & Construction (NYSEARCA:PKB)
Conference call transcripts: Toll Brothers F2Q07, The Home Depot F1Q07
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