NAHB Teleconference to Explain Housing Stimulus Act

NAHB will hold a panel to discuss the recently passed legislation on Monday at 2:00 pm Eastern time.

Masco Sales Dip 15% in Second Quarter

Masco Corp. reports its sales for the second quarter were down 15% from the same period last year to $2.6 billion. North American sales were down 19%.

Scenes From the Mortgage Crisis, Part Next

A Haitian death squad leader (and CIA informant), said to be responsible for the deaths of thousands, who was supposed to have been deported in 1995, is convicted of mortgage fraud in Brooklyn. He was already serving time for a different mortgage fraud on Long Island.

Home Price Index Shows Record Drop in May

The Standard & Poor's Case-Shiller Composite Home Price Indices showed record drops in May, with both the 10-city composite down 16.9% from May of 2007, and the 20-city composite down 15.8% in that span.

Feds Take Over Two More Banks

According to the New York Times, the F.D.I.C. has taken over First National Bank of Nevada and First Heritage Bank, N.A.

Foreclosures More Than Doubled in Second Half

From Bloomberg:

"U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.
One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005. "

New Home Sales Down 36% in First Half 2008

Sales of new homes through the first half of 2008 totalled just 289,000 units, down 35.5% from the same period of 2007, according to the most recent figures from the Census Bureau.
June new house sales were down 33.2% from the same month last year to seasonally adjusted annualized rate of just 530,000 units.
At present sales rates, builders have 10 months worth of unsold inventory.

Existing Home Sales Drop 16% in June

Sales of existing homes in June fell 15.9% from the same month last year to a seasonally adjusted annual sales rate of 4.86 million units. Single family existing home sales dipped 14.8% to a 4.27-million-unit sales pace, according to the National Association of Realtors.
Through the first half of 2008, some 2.39 million existing homes have been sold, down 16.7% from the same period of 2007. At the present sales pace, there is an 11.1-month inventory of unsold homes on the market, 22.0% higher than inventory levels at this time last year.
Median sales price of an existing home in June was $215,100, down 6.1% from June of 2007.

Scenes From the Mortgage Crisis, Part Next

Another in the series of revealing snapshots explaining how we got here:

"During an eight-month investigation, The Miami Herald analyzed computer records for more than 222,844 Florida mortgage professionals, examined thousands of records from the Office of Financial Regulation, reviewed hundreds of court files and interviewed dozens of regulators, brokers and victims.
The newspaper found:
• From 2000 to 2007, regulators allowed at least 10,529 people with criminal records to work in the mortgage profession. Of those, 4,065 cleared background checks after committing crimes that state law specifically requires regulators to screen, including fraud, bank robbery, racketeering and extortion.
• More than half the people who wrote mortgages in Florida during that period were not subject to any criminal background check. Despite repeated pleas from industry leaders to screen them, Florida regulators have refused."

Music To Your Rear

If you've ever wanted a toilet seat shaped like a piano or a guitar, why?

Scenes From the Mortgage Crisis, Part $2.5 Billion

Here's the good news from Citibank's second quarter results: the bank only lost $2.5 billion.

Wachovia St. Louis Office Raided by Authorities

From the department of polite euphemism at CNN:

"Securities regulators from several U.S. states on Thursday inspected the
St. Louis headquarters of Wachovia Securities, seeking documents and records on
the company's sales practices."

Harvard Sees Home Improvement Slump Through First Quarter 2009

The Leading Indicator of Remodeling Activity (LIRA) from Harvard's Joint Center for Housing Studies sees a slumping economy and struggling housing sector continuing to hold down remodeling spending, a trend which will continue and intensify at least through the first quarter of 2009.

Remodeling spending was down 5.6% in the second quarter of 2008 from the level in the third quarter of 2007. Harvard predicts spending will slump 7.1% from that third quarter in the third quarter of this year, decline another 9.2% by year's end, and be down 11.1% by the end of the first quarter of next year.

Starts Down 30% Through First Half 2008

About 512,000 homes were started in the first half of 2008, down 30.0% from the same period of 2007, according to the Census Bureau. Single family starts plummeted 40.3% to 353,500 units over the first six months.
The seasonally adjusted annualized starts rate for the month was 1.07 million units, down 26.9% from the rate for June, 2007. The single family start rate was 43.0% behind the pace for June of 2007, at just 647,000 units. It was the weakest performance for single family starts since January, 1991.
Through the first six months of 2008, some 515,900 permits had been issued, 33.2% below the total for the same period last year. Over that span, single family permits fell 41.1% to 332,300 permits.

Rueful Laughter Ensues

From the wicked sinners at The Onion:

“The current economic woes, brought on by the collapse of the so-called "housing bubble," are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.

"Perhaps the new bubble could have something to do with watching movies on cell phones," said investment banker Greg Carlisle of the New York firm Carlisle, Shaloe & Graves. "Or, say, medicine, or shipping. Or clouds. The manner of bubble isn't important—just as long as it creates a hugely overvalued market based on nothing more than whimsical fantasy and saddled with the potential for a long-term accrual of debts that will never be paid back, thereby unleashing a ripple effect that will take nearly a decade to correct."”

Scenes From the Mortgage Crisis, Part Next

From the Los Angeles Times:

"The Federal Deposit Insurance Corp. took over Pasadena-based IndyMac late
Friday and has assured depositors that accounts with $100,000 held in a single
name or $250,000 in a retirement account are safe.But many customers have said
that when they checked their balances online, tens of thousands of dollars
appeared to be missing. And when they went to branches in search of answers,
they encountered lines hundreds of people deep and unhelpful staff members. On
Tuesday, reports of unruly crowds brought police to branches in Encino and
Northridge, although there were no arrests or injuries.Noelle Gabay of
Northridge, a budget analyst for the state of California, said FDIC officials
acknowledged that she was owed $213,500 but provided her access only to $99,000.
"My trust in the FDIC is gone," said Gabay, 49. "The question is now, where do
we put our money? Do we buy a bigger mattress?""

June Kitchen Appliance Shipments Dip 10%

Shipments of kitchen appliances for June totalled 4.1 million units, down 10.3% from levels for the same month in 2007, according to the most recent figures from AHAM.
Through the first half of 2008, kitchen appliance shipments lag behind shipments for the same period last year by 10.3%, with 19.9 million units shipped. The chart below gives first half breakdowns by category:

FDIC Halts IndyMac Forecloasures

From Reuters: "The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac's portfolio, FDIC Chairman Sheila Bair said on Monday."

Sign of the Times

Which is sadder? That the Fed actually had to order this, or that this is news?

"...the Federal Reserve Board on Monday voted unanimously to bar lenders
from making higher-priced mortgages without regard to a consumers' ability to
repay."

Robot Chef Works in Wireless Kitchen

The Technical University of Munich puts us one step closer to living like the Jetsons.

Beat the Summer Doldrums

The Retail Contrarian has tips for small businesses to keep employees motivated and productive during the Dog Days.

FDIC Takes Over Failed IndyMac Bank

California-based IndyMac Bank, which had specialized in risky mortgages, was seized by the Federal Deposit Insurance Corporation. It is the second largest bank failure in U.S. history and the fifth bank this year to fail.
The bank reopens today under Federal control.
FDIC says 90 banks are currently at risk of failing.

Fed Acts to Prop Up Fannie and Freddie

From the Wall Street Journal:

"In a statement timed to precede the opening of Asian markets Monday, as well as
a closely watched auction of debt by Freddie, the Treasury said it plans to seek
approval from Congress for a temporary increase in a longstanding Treasury line of credit for the two companies.
The Fed's Board of Governors met Sunday in Washington and voted to grant the New York Fed authority to lend to Fannie and Freddie "should such lending prove necessary," the central bank said in a statement. The move would effectively give the two companies access to the Fed's discount window if necessary, providing a backstop in case the firms were to face a short-term funding crisis down the road."

GE to Spin Off Entire Industrial Unit

From AFP:

"As we explored our options for appliances, it became clear that the
fastest, most efficient step we could take in completing the transformation of
our industrial portfolio would be to focus on a possible spin-off of the entire
unit," GE chairman and chief executive Jeff Immelt said.

Government Bailout Looming for Fannie Mae, Freddie Mac?

From Bloomberg:

Chances are increasing that the U.S. may need to bail out Fannie Mae
and the smaller Freddie Mac, former St. Louis Federal Reserve President William
Poole said in an interview. Freddie Mac owed $5.2 billion more than
its assets were worth in the first quarter, making it insolvent under fair value
accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent
to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

June Foreclosures Jump 53%

One out of every 501 US households received a foreclosure notice in June, as the number of homes foreclosed increased 53% over the same month last year to 252,363 properties, according to RealtyTrac. Although that number was 3% below the May total, it still marked the second straight month with more than a quarter million foreclosures.
James J. Saccacio, CEO of the firm, said, "The year-over-year increase of more than 50% indicates we have not yet reached the top of this foreclosure cycle. Bank repossessions, or REOs, continue to increase at a much faster pace than default notices or auction notices. REOs in June were up 171% from a year ago, while default notices were up 38% and auction notices were up 22% over the same time period.”

After Soft April, Dealer Sales Rebound in May

After a slump during April, dealers' kitchen and bath sales rebounded during May, according to the NKBA's Business Barometer Survey. Dealers reported an average of 15.9 kitchen sales for the month, up from 9.2 sales in April. About 22% said sales were higher than at this time last year, but 57.0% thought sales were lower. Average kitchen price reported was $27,241, up from $25,873 in April.

Dealers closed an average of 10.1 bathroom sales in May, up from 6.2 in April. Some 21.3% of those dealers responding thought bath sales were higher than at this time last year, but 41.3% said they were lower.

Dealers averaged 27.9 prospects in their showrooms in May, up from 27.1 in April.

Some 46.3% of dealers polled say they expect sales to go higher over the next six months compared o the previous six; just 30.0% saw lower sales volume ahead. More than half of dealers polled will be keeping the number of employees they have as-is; 13.3% plan to hire new employees, but 16.9% expect to lay employees off.

"Costs of doing business are up, sales are down; in the last two years the pie is getting smaller and there are more competitors looking for a slice. Our margins have dropped 23% from last year," said one respondent. Said another, "The economy is horrible. The banks are not lending money, consumers cannot get credit and everything seems to be upside down."

"People are wanting to redo their kitchens and baths but holding back a bit for now," one dealer added, while another said simply, "Worst economic times I've seen in twenty plus years."

However, another noted, "Stable higher end clients are still doing projects because their homes and life style have even greater importance."

Pending Home Sales Dipped 14% in May

The National Association of Realtors Index of Pending Home Sales slipped to 84.7 (100 = 2001) in May, down 14.0% from the same month last year.
NAR says existing-home sales are expected to total 5.31 million in 2008, and then increase 5.0% in 2009 to 5.58 million. There were just over 5.65 million existing homes sold in 2007. (and to put that in persepctive, in 2005 there were almost 7.08 million sold).

Fed Says No Rebound Until Next Year

From the New York Times:

Officials said that the Federal Reserve remained concerned that the declining housing market would not reach its bottom and financial markets would not become more stable before some time next year, and that the economy would continue to suffer as a result of declining consumer confidence, a sluggish global economy and the widespread effects of the rapid jump in oil prices.

Happy Independence Day Holiday!!

K+B DeltaVee will return July 8th. Until then, let's sing:

Be kind to your webfooted friends
For a duck may be somebody's mother...

Or you may prefer the actual words to the song, as penned by John Philip Sousa himself:

Let eagle shriek from lofty peak
The never-ending watchword of our land;
Let summer breeze waft through the trees
The echo of the chorus grand.
Sing out for liberty and light,
Sing out for freedom and the right.
Sing out for Union and its might,
O patriotic sons.

Other nations may deem their flags the best
And cheer them with fervid elation,
But the flag of the North and South and West
Is the flag of flags, the flag of Freedom's nation.

Hurrah for the flag of the free.
May it wave as our standard forever
The gem of the land and the sea,
The banner of the right.
Let despots remember the day
When our fathers with might endeavor
Proclaimed as they marched to the fray,
That by their might and by their right
It waves forever.

Residential Construction Employment Dips 12% in June

A seasonally adjusted annualized total of 848,700 workers were employed in residential construction in June, down 11.9% from the same month last year, according to the Bureau of Labor Statistics. Workers in residential construction specialty trades totalled under 2.1 million for the month, down 10.0% from June, 2007.
Overall, construction employment fell 2.9% to 7.43 million in June; some 785,000 workers were unemployed. The construction unemployment rate climbed to 8.2%, up from 5.9% in June of last year.
Average weekly earnings for construction workers during the month was $853.01, up 2.7% from June, 2007; average hourly earnings were up 3.5% to $21.65.

1st Quarter Home Equity Loans Fall Behind

From Bloomberg:

"Consumers fell behind on loans secured by their homes at the fastest pace
in two decades in the first quarter, signaling deeper distress in the U.S.
economy, the American Bankers Association reported.
Home-equity lines of credit at least 30 days past due rose 14 basis points to 1.1 percent of accounts in the quarter, the Washington-based group said today in a statement. Delinquent credit-card accounts increased 13 basis points to 4.51 percent, the highest since 2006. Late rates worsened in five of eight categories of non-revolving loans tracked by the group. "

Eli Broad on the Economy

From Bloomberg:

"Billionaire investor Eli Broad said the U.S. economy is in the worst recession since World War II and a recovery in the housing market is 'several years' away.
'This is worse than any recession we've had since World War II,' Broad, 75, said in an interview yesterday. Broad, the founder of homebuilder KB Home, said the U.S. should avoid a depression on the scale of the 1930s because the country now has sufficient 'safety nets'.''

Happy Signed Independence Day!

On July 2, 1776, the Continental Congress of the 13 Colonies adopted the Declaration of Independence, which was signed by Charles Thompson, the secretary of Congress, and John Hancock, the presiding officer. Copies were printed by John Dunlap and distributed to the states on July 4th. (Twenty four copies of that first printing still exist, includng the two in the Library of Congress.) Independence was first announced to the public in Philadelphia, July 6th, and around the fledgling country days and even weeks later.

When Hancock put his famous signature on the document, he said, "We must be unanimous, we must all hang together." Ben Franklin replied, "We must indeed all hang together — or else, most assuredly, we shall all hang separately."

The other signers of the Declaration of Independence added their "John Hancocks" between August and November of that year. Last to sign was New Hampshire's Matthew Thornton.

The first official printing with the famous signatures was in January, 1777. Unfortunately, the first edition omitted the signature of Thomas McKean of Delaware, who claimed to have signed in August and was added to later editions.

Fifty-six signed in all. The youngest signer was South Carolina's Edward Rutledge, aged 26; the oldest, Pennsylvania's Ben Franklin at age 70.

Eight months after the signing, John Morton of Pennsylvania became the first of the 56 to die.

Seventeen went on to fight in the Revolutionary War. Richard Stockton of New Jersey, George Wallon of Georgia, Thomas Heyward, Jr., Arthur Middleton, and Edward Rutledge of South Carolina, and the wife of Francis Lewis of New York were all taken prisoner by the British. Another seventeen lost most or all of their property and wealth. Not one renounced the Declaration, or left the cause.

Two of the signers (John Adams and Thomas Jefferson) became Presidents of the U.S. Three became Vice Presidents Adams, Jefferson, and Eldridge Gerry of Massachusetts, after whom the word “gerrymander” gets its name.) Two became Supreme Court Justices (Samuel Chase of Maryland and James Wilson of Pennsylvania). Four became senators; four, ambassadors; seventeen, governors of their states; fifteen, state judges, including nine chief justices; five, speakers of their state legislatures.

The last survivor was Maryland’s Charles Carroll, who passed on in 1832 at age 95. He had also been the wealthiest signer; when he affixed his signature, one of the other fifty-six quipped “There goes a million dollars.”

Freedonia: Cabinet Demand to Grow 4% per Year Through 2012

Demand for kitchen cabinets is expected to grow 3.9% per year through 2012 to $18.5 billion, according to a new study from The Freedonia Group. The study is priced at $4,700. To order, call (800) 927-5900.

May Residential Construction Spending Falls 27%

Spending on residential construction in May fell 26.9% from the same month last year to a seasonally adjusted annualized rate of $385.9 billion, according to the Census Bureau. For the first five months of this year, some $150.9 billion worth of homes have been built, 27.0% below the same period in 2007.