New Home Sales Dying!!!!!!!!!!!!!!!!!!
WARNING from Standard Pacific's report tonight:
Our absolute sales absorption rates continued to reflect difficult housing conditions in most of our markets, resulting from reduced housing affordability, and the higher level of homes available for sale in the marketplace, including increasing levels of foreclosure properties. In particular, the Company's sales absorption rates in June 2008 were weaker than the prior two months, and thus far the Company has seen these slower trends continue into July 2008. These conditions have been magnified by the tightening of available mortgage credit for homebuyers, including increased pricing for jumbo loans and the substantial reduction in availability of "Alt- A" mortgage products. All of these conditions have resulted in a declining home price environment which has contributed to an erosion of homebuyer confidence and a decrease in the pool of qualified buyers.
With a Q2 absorbtion rate of just two per selling effort per month....how bad are June and July??????
Now with the Housing Bill just passed.....DAP(downpayment assistance programs) financing is prohibited....this accounted for over 20% of sales for some new homebuilders. Further, the bill is likely going to put tighter restrictions on Fannie and Freddie now that Uncle Sam is on the hook for defaults.
Tighter lending standards, increasing layoffs, rising foreclosures, crashing prices.......the outlook is challenging indeed.
Demon is this inflation???????