Items of Interest:
U.S. Housing Starts Drop to Lowest Level in 17 Years -- Builders in the U.S. broke ground in May on the fewest houses in 17 years, signaling declines in construction still represent the biggest risk to the economy.
Housing starts fell 3.3 percent to a 975,000 pace from a revised 1.008 million in April, the Commerce Department said today in Washington. The reading was below economists' forecasts and the lowest since March 1991. Building permits, a sign of future construction, fell 1.3 percent to a 969,000 rate.
Rising foreclosures, higher mortgage rates and declining property values threaten to keep home sales depressed in coming months, discouraging builders from starting new projects. Spending on residential projects may continue to be a drag on growth the rest of this year as builders try to work off excess inventories.
``The downtrend is still in place,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``Inventories are still very high, prices are still coming down. None of that argues for a turnaround yet.'' ...
Housing Starts: Lowest Since 1991 -- The graph shows total housing starts vs. single family housing starts. Both total starts and single family starts are at the lowest level since 1991.
Note that the current recession on the graph is not official...
Home Builders Confidence Touches Record Low; Calls for Congressional Action Mount -- Home builders continued to call for Congressional action to bolster the faltering U.S. housing market Monday afternoon, as builder confidence in the market for newly-built single-family homes during June matched a record low seen last December. According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), the index slipped to 18 in June; that’s off from 19 one month earlier.
The HMI series began in January of 1985, and a reading over 50 indicates perceived strength in the newly-built housing market; obviously, we’re a ways off from that watermark currently.
The renewed lows in builder confidence spurred renewed calls for housing legislation from NAHB officials, including CEO Jerry Howard, who argued that “targeted housing stimulus legislation” was needed to keep builders afloat. ...
M&T sues Deutsche Bank over subprime mortgage deal -- M&T Bank Corp. sued German banking giant Deutsche Bank AG today, accusing the global investment banking powerhouse of knowingly selling M&T unsafe mortgage investments. M&T is seeking to recover $182 million in losses and damages.
The legal action represents an attempt by Buffalo-based M&T to recoup most of the damage it suffered on a trio of mortgage-backed securities in the fourth quarter of last year. That's when mortgage delinquencies and foreclosures were soaring nationwide, causing vast losses not only for lenders but also for the holders of such investments.
The lawsuit, filed in state Supreme Court in Erie County, concerns two investment securities M&T purchased from Deutsche Bank in February 2007. In its lawsuit, M&T accuses Deutsche Bank of fraud, saying it deceived M&T by claiming that the two securities it sold were "safe, secure, and nearly risk-free." ...