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Tuesday, August 26, 2008

Housing/Subprime/Credit Roundup — August 26, 2008

Items of Interest:

U.S. Says Banks on `Problem List' Rose 30% in Quarter -- The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years as more commercial real-estate loans were overdue.

The list had 117 banks as of June 30, up from 90 in the first quarter and the highest since mid 2003, the agency said today in its quarterly report without naming any institutions. FDIC-insured lenders reported net income of $4.96 billion, down 87 percent from $36.8 billion in the same quarter a year ago.

``Quite frankly, the results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,'' FDIC Chairman Sheila Bair said at a news conference in Washington...

Housing numbers:
  • S&P/CaseShiller Home Price Index: 167.69 vs. 167.20 consensus forecast
  • S&P/CaseShiller Composite 20 city index (one year change): -15.92% vs. -16.20% cons.
  • Census Bureau - New Home Sales: 515,000 vs. 525,000 consensus forecast
  • New Home Sales (one month change): 2.4% vs. -0.9% cons.
  • Median price of a new home $230,700, from $246,200 a yr. ago: -6.3%
U.S. House-Price Slide Eases, S&P/Case-Shiller Shows -- U.S. house prices declined at a slower pace for the fourth straight month in June, signaling that the worst housing slump in more than 25 years may be starting to stabilize.

Home prices in 20 U.S. metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May, the S&P/Case-Shiller index showed. Prices were down 15.9 percent from the previous year, less than economists had forecast.

The figures add evidence that the drag on the economy from the housing slump is lessening, while officials and analysts predict that a rebound remains at least a year away. A private report yesterday showed that sales of existing homes in the past three months averaged the same rate as the previous period...
Housing Wire:
Housing Prices Post Record Decline in Q2 -- In a nutshell, U.S. home prices in general are still falling at an astronomical rate, but some areas have seen the rate of decrease moderate in recent months — an effect that may be seasonality, may be the start of more sustained price declines (compared to accelerated price declines), or may reflect purchase activity at the lower price points and among deeply-discounted foreclosure properties now flooding many key local housing markets...

Housing Doom:
Case-Shiller Home Price Drops Slowing And Accelerating -- My take: Seasonal patterns show that month-to-month moderation in price drops is to be expected the first half of the year. The year-over-year drops are more significant- and those continue to accelerate.

Have a great morning, and don’t let the spin give you vertigo.

CNBC / Realty Check:
Home Prices Turning Up in Spots

New-Home Sales in U.S. Rose From 17-Year Low, Inventory Plunged -- New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades.

Sales increased 2.4 percent to a 515,000 annual pace that was lower than anticipated after a downwardly revised 503,000 rate in June, the Commerce Department said today in Washington. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace.

Lower prices have made homes more affordable for Americans still able to obtain a mortgage, stemming the slide in demand and making it more likely the property glut will clear. A more stable housing market would eliminate one of the biggest risks to the economy even as the credit crisis and job losses threaten growth...

Economists forecast new-home sales would drop to a 525,000 annual pace from an originally reported 530,000 rate the prior month, according to the median estimate in a Bloomberg survey of 76 economists. Forecasts ranged from 493,000 to 570,000.

The median price of a new home decreased 6.3 percent to $230,700, from $246,200 a year earlier....
New home sales rise, but grim news lurks -- Sales of new homes in July grew 2.4%, due to a large downward revision in sales from the previous month. Unadjusted monthly sales fall to 13-year low...

Calculated Risk:
July New Home Sales -- According to the Census Bureau report, New Home Sales in July were at a seasonally adjusted annual rate of 515 thousand. Sales for June were revised down to 503 thousand...
First American CoreLogic Releases June 2008 LoanPerformance House Price Index -- The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,569 ZIP codes, 958 Core Based Statistical Areas (CBSA) and 676 counties located in all 50 states and the District of Columbia [via TBP] ...

CoreLogic: June 2008 LoanPerformance House Price Index----
Jim Boswell / Minyanville:
Our Assets Are Your Debts -- How Fannie, Freddie went rogue.

Though Fannie and Freddie are indeed sponsored by the government, they don't act or operate like government-affiliated entities. Instead, they act like what they really are: 2 independent, publicly-traded, Fortune 500 companies - profit-driven, rather than policy-driven.

Because it's impossible to serve 2 masters at the same time -- and because Fannie and Freddie's primary allegiance is to their stockholders -- they have repeatedly operated counter to the best interest of the financial goals and policies of a complacent and somewhat bewildered U.S. Government...
St. Louis Dispatch: Other shoes to drop
Gross, Fuss say any new GSE deal needs Treasury - Bill Gross, chief investment officer at bond giant Pimco, tell Reuters again that a Treasury bailout of Fannie Mae and Freddie Mac isn't imminent, and said last week that, "The election season and the relatively recent passage of the (Treasury) authorization argue for delay as long as possible," though he notes both will have to keep selling notes and debt at "relatively stable spreads." [via USNews]

Did Freddie Mac find a quarter on the way to bankruptcy court?

Washington Post:
Freddie Mac Sells $2 Billion in Notes -- Freddie Mac sold $2 billion of short-term notes in a weekly auction, generating better demand compared with last week as the second-largest U.S. mortgage-finance company paid higher yields compared with benchmarks...

Housing Wire:
Another theory on Freddie’s debt sale -- [financial trickeration?] a bank buying $100 million of Freddie paper yielding 2.858% could flip it to the Fed, borrowing $97 million at around 2.4%...
FT: How to shore up America’s crumbling housing market

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia