US housing market even further down the crapper.......

[marmar]

from Bloomberg:



U.S. Economy: Pending Home Resales Decline More Than Forecast

By Timothy R. Homan and Bob Willis

Sept. 9 (Bloomberg) -- Fewer Americans signed contracts to purchase previously owned homes in July as harder-to-get financing kept would-be buyers from taking advantage of lower prices.

The index of pending home resales fell 3.2 percent after rising 5.8 percent in June, the National Association of Realtors said today in Washington. A separate report showed inventories at U.S. wholesalers piled up twice as fast as forecast in July as their sales slid.

Today's housing figures help explain why the government took over Fannie Mae and Freddie Mac two days ago. Policy makers are aiming to stem the increase in mortgage rates triggered in part by the turmoil that engulfed the two companies, which make up almost half the $12 trillion U.S. mortgage market. Rates have dropped since Treasury Secretary Henry Paulson's intervention.

``The market is still showing a lot of fragility,'' said Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina, who forecast the pending sales gauge would drop 3 percent. ``The credit crunch is causing some of these borrowing costs to remain higher and that's part of the reason people are hesitant to jump in.''

Stocks dropped and Treasuries rose. The Standard & Poor's 500 Stock Index lost 0.8 percent to 1,257.41 at 10:32 a.m. in New York. Benchmark 10-year Treasury notes yielded 3.66 percent, down from 3.69 percent late yesterday. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601068&sid=aZFgAxUK63y8&refer=home

[Tripper11]

1. You know it's bad when it hits millionaire athletes!! Link inside

:sarcasm:

Housing market hurts star
In a "desperation deal," NBA player Allen Iverson has dropped the price of his 14,000-square-foot home.

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/For-sale-Allen-Iverson-s-six-bedroom-home-in-Vi?urn=nba,106478

[JohnyCanuck]

2. Kunstler: "...the way we live in America can't continue."

Last Ditch


Why do the big deals always happen over the weekends? So the big boyz in government and finance can take off their neckties when they bargain with each other? So the markets will be closed and unable to register a response one way or another? So the shrinking fraction of the US public that pays attention to anything besides Nascar and pornography won't catch the news Saturday evening?

This weekend's big deal was the US government taking over the "government sponsored enterprises" (GSEs) Fannie Mae and Freddie Mac that guarantee trillions of dollars in mortgages. The "guarantee" is supposedly accomplished by converting bundles of mortgages from the banks and loan companies that originate them (that make the contracts with the buyers of houses) into bonds that can be sold downstream. Risk was theoretically dispersed among the holders of these bonds. This all seemed to work during the long stable period when our cheap oil economy was chugging along, and house prices maintained a consistent relationship with incomes, and people paid their mortgages dependably. The whole system ran like a reliable machine -- like a Chrysler slant-six engine!

Until the cheap oil age came to an end. Then, all parts of the system shook apart. It was the end of cheap oil that catalyzed the housing collapse and, by extension, the current huge financial crisis. But the run up to it was like a bounce off a high diving board into an empty pool. The bounce came around 2001 when it became apparent that the US standard-of-living could not be maintained on incomes in a post-cheap-oil economy. The trauma of 9/11 prompted a new and utterly insane consensus to form that the US standard of living could be switched over from income to massive debt. All the normal brakes against irresponsible lending and borrowing came off -- embodied in Alan Greenspan's absurd statement that it was a good time to assume an adjustable rate mortgage when interest rates were at a historic low -- meaning they could only be adjusted upwards. Why hold Greenspan responsible? Because he was at the apex of the authority vested with establishing norms, and he shoved our behavior into the realm of the recklessly abnormal, and he should have known better.

SNIP

Since then, the US economy and the financial part of it that became a nine hundred pound tail wagging a thirty-pound dog, has been held together with baling wire, duct tape, and band-aids. All the debt run up by all parties -- home-owners, credit-card holders, business, banks, hedge funds, government -- is not being paid back reliably, and all the leveraged arrangements that depend on it being paid back are coming apart. Thus, capital disappears. The wealth of a nation disappears. All that remains is the pretense that we are still a wealthy society

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/09/last-ditch.html