Tuesday, January 8, 2008

Housing woes continue

First, pending home sales fell 2.6 percent in November. How bad is the housing market? Even the bulls are sounding bearish:

In a speech on Tuesday, the head of mortgage finance company Fannie Mae, chimed in with a pessimistic note. Chief Executive Daniel Mudd said home prices would “perhaps begin to gain modestly” in 2010.

That’s just three years away, folks. At least we’re getting more realism from housing insiders.

Second, Countrywide stock took another big tumble of about 20 percent. The company felt compelled to deny the increasing bankruptcy speculation:
In a prepared statement earlier in the day, the company said there was “no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.” …

The stock was shaken by a report in The New York Times that said court records show the lender fabricated documents related to a bankruptcy case of a borrower in Pennsylvania.

Other Countrywide actions in borrowers' bankruptcy cases have come under scrutiny in the past.

The fact that nobody from China or Abu Dhabi has put a penny into Countrywide ought to bely the company’s forced optimism.

Finally, KB Home’s stock also took a tumble on a fourth-quarter loss of nearly $800 million. The fact that KB, which focuses on made-to-order homes, not pre-cut, pre-fab new developments, continues to slide should underscore the depth of the continuing struggles in the housing market.