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.