During last month the existing home sales fell down again and it is reported that a large number of homebuilders are facing the worst ever quarterly earning. These homebuilders believe that the main reason behind this mess in the stressed housing sector is the continuous sub prime mortgage crisis.
The National Association of Realtors mentioned that during the month of August it was noted that the purchases of the previously owned homes fell down by 4.3 percent from what is was in the month of July, i.e. sending sales slipping to five years low. In the month of July, the annual sales rate was 5.75 million that dropped down to 5.50 million. Statistic says that the existing home sales have fallen almost 13 percent over the period of last 12 months.
On the other hand, the Lennar Corporation declared their biggest quarterly loss in its history after it wrote down $848 million in the value of real estate. The company’s net loss was $513.9 million, or we can say $3.25 per share, compared to the profit of $206.7 million, or $1.30 per share, during the same time of the previous year. The shares of Lennar Corporation were down by 4 percent in midday trading, at $23.20.
The shocking news in the housing sector was joined with a disappointing report on customer confidence from the Conference Board, whose index dropped down to 99.8 during September from 105.6 in the month of August. This fall was much more than what was forecasted. Its index is now at its lowest level in the past two years. A group of analyst believes that the reason behind the concern among the consumers is the weak job market and stagnant salary that has probably created declines in the consumer spending and job creation during the period of coming months. Continue reading →