Zacks.com cross post:

This morning the National Association of Realtors reported that existing home sales in December fell to a seasonally adjusted annual rate (SAAR) of 4.89 million, 2.2% below November, and down 22.0% from a year ago. The report was also below consensus expectations of a SAAR of 4.95 million. Existing home sales are recorded at the close of escrow, so these numbers reflect deals being made for the most part in November. The price of a median house was $208,400, down 6.0% from a year ago. Sales fell in all four regions with the Northeast slowing the most this month, down 4.6% for the month and 22.4% for the year. The West followed with a 2.1% decline for the month and down 24.8% year over year. Sales in the Midwest fell 1.7% for the month and are off 20.5% year over year. The South fared the best with only a 1.0% decline for the month and off 20.9% year over year. In terms of median prices, the more expensive the region, the more prices are falling. The West is the most expensive region with a current median price of $309,800, but that is down 11.1% year over year. The Northeast follows with a median price of $258,600 which is down 8.9% from a year ago. The median price in the South was $173,400, off 4.1% from a year ago and in the Midwest the median price fell 3.9% to $159,800.

The good news is that inventories fell 7.4% to 3.91 million. That reduced the months supply figure to 9.6 months from 10.1 months in November. However, housing inventories almost always fall in December (do you really want the prospective buyers touring your house on Christmas Eve?), so do not read too much into the decline in inventories. The decline was actually smaller than the average decline for December since 2001. We are far from out of the woods in the housing market, and it is very likely that inventories will swell again in the spring. Relative to historical relationships with rent and incomes, housing prices still have about another 15-20% decline to come nationwide (more in bubble areas).

Since the surprise rate cut by the Fed, the homebuilding stocks have had an incredible rally, think of it as not credible. There have been several other sharp rallies in these stocks on the way down. If you are not out of them, get out now. If you have a strong stomach, consider shorting them. The time to buy these is after two of the following stocks have declared Chapter 11 bankruptcy (then buy the rest of them): Beazer (BZH), Lennar (LEN), D.R. Horton (DHI), Toll Brothers (TOL), Standard Pacific (SPF), Hovnanian (HOV), Centex (CTX), KB Homes (KBH), M/I Homes (MHO), Ryland (RYL) and Pulte (PHM).

Now I read on Bloomberg it is $625k

The accord includes a provision allowing Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, to temporarily buy mortgages of up to $625,000, exceeding a $417,000 federal limit.

Guess we will have to wait until Bush gives his pump the market speech later today.

gold over $900. Thank you BB. Let's get another rate cut on Tuesday and push it over $1000.

Stuart, I think that's the point. Let the banks off the hook and hand the ticking bomb to the GSE's (and Uncle Sam).

O-Joe, you think just anybody can lose $7 billion? It takes real skill.

Otherwise, how can we explain why companies reward guys like Chuck Prince, Stan O'Neal, and Angelo Mozillo with such hefty severance package.

More ratings changes:

The affirmations affect approximately $3.2 billion in outstanding certificates and reflect adequate relationships of credit enhancement (CE) to future loss expectations. The downgrades reflect the deterioration in the relationship of CE to future loss expectations and affect $35.6 million in outstanding certificates.

The underlying collateral for the aforementioned transactions consist primarily of fixed- and adjustable-rate, conventional, fully amortizing, first lien residential mortgage loans extended to prime borrowers. The mortgage loans were either originated or acquired by JP Morgan Chase and Chase Home Finance

UNTERNEHMENSNACHRICHTEN NEWS

Misean,

Why are you pulling your hair out?

You've got your silver and gold bullion hidden in your house.

Thanks to you, I've got some SLV.

The Fed did us a favor!

If this is true, we'll get the next uber-boom / bust in steel, the meats or defense as these are the topics rules by aries, the next sign uranus will travel thru.

I can understand Aries steel and defense. War, bullets, bombs, etc.

But meats? Is that a sector?

I'll see if I can find a meat ETF.

I gotta keep my day job; this waiting for the market to tank/bond insurer or FNMA to go TU and my SDS to go up (and stay up!) is killing me.

See what I mean?

You're back to the Anxiety stage of the cycle.

CR said: "...This suggests sales in 2008 will fall significantly from the 2007 level."

Interest rates have now returned to the low levels they were at before the "top" in housing. You honestly don't believe that this is going to make any difference, especially when considering that there's good reason to think they're going to be lower just in time the busiest part of the home-buying season?

Sebastia

Sebastian,
The return to low interest rates is accompanied by stricter standards of qualification. Low interest rates are not what is driving sales.

what surprises me is how seemingly stable inventory was up until 05.

Inventory never got above 2,500,000 until 05. Yet in 2 -3 years it grew by over 80% (eyeballing the numbers on the graph) That's an amazing amout of inventory. I'd love to see inventory number prior to 82 and see if there was ever a similar parcentage growth in inventory and what the repercusions of that was. Truely uncharted territory.

Rich- "That's gotta cost two...entities...50 or 60 bucks a day."

Ah, but good tobacco, good cognac, life, and especially Fed minutes, are meant to be savored and enjoyed.

cutting the fed rates hasn't helped out treasuries and mortgages that much at all has it

First!
Cooking ramen in my percolator | 01.24.08 - 4:37 pm |

Your timing is exquisite.

Thank you, it's the first chuckle I've had today.

Analyzing the market is easy compared to waiting for the water to boil.

E-Trade reports quarterly net loss of $1.7 billion

E-Trade reports quarterly net loss of $1.7 billion - MarketWatch

"VANCOUVER, British Columbia, Jan 24 (Reuters) - Former Federal Reserve Chairman Alan Greenspan said on Thursday that subprime mortgages were risky, but they helped broaden home ownership.

ME: So homeownership is an endgame with no risk in itself? Anyway, he's right...subprime increased homeownership....for BANKS!

"During a speech to a financial audience in the Canadian West Coast city of Vancouver, Greenspan said subprime mortgages financed an increase in housing among minorities."

ME: So before subprime mortgages minorities had no housing? Did they live in the bushes for years until subprime was born?

"Subprime mortgages were risky, but they were worth the risk, he said. (Reporting by Nicole Mordant and Allan Dowd; Editing by Peter Galloway)"

ME: I don't recall him calling subprime "risky" before. And risky for whom exactly? And are we now trying to prevent those who took the risk from bearing the cost? Bailouts anyone? I know one thing, those who didn't take risk and saved are getting less for those savings. Perhaps they are the ones who took the risk...hop on the bandwagon or else.

Well, that statement supports CR's conclusion, but is it true? If you look at CR's annual existing home sales chart, even the 2001 recession didn't slow housing sales. The Fed was aggressively lowering rates then, too. Were the lending standards as loose then as they were in 2005-2006?

Compared to 2005-2006, houses were relatively cheap in 2001.

i'm tired of hearing how expensive it is in NYC. If you can't afford it--MOVE!

Sebastian, is your real name Sancho?

Oh, two good laughs in one thread!

Context is very important.

If I walk up to you openly on a noisy street and clap my hands loudly you will not be impressed.

If I sneak up behind you on a dark and quiet street and clap my hands loudly in exactly the same way, your response will be quite different.

Same stimulus, same set of sensory nerves, but different brain state receiving the information; vastly different results.

Same with interest rate cuts.

Those who don't appreciate context will get crushed in their predictions.

One trader in France caused 100's of billions in worldwide market cap to be lost in two days.

In as much as the market cap bears no semblance to reality, this decline is a very good thing.

I can imagine that any politician trying to get re-elected thinks otherwise and will attempt to assert their will in these matters.

On Greenspan's comments about subprime and home ownership: My analysis of one month's homes getting foreclosure notices in our northwest Washington county showed that close to half of these loans were refis. I have read anecdotal accounts of similar situations in urban neighborhoods elsewhere. People ignorant of finance did ruinous refi deals on homes they already owned. Now they are on the verge of becoming renters again.

This rogue trader BS is just a small sample of bigger problems down the pipe.

How are MSFTs earnings measured in ounces of gold, barrels of oil or bushels of corn?

Does anybody know when conforming loan limits would be raised, if the bill passes? How immediate would it be?

I've read some comments suggesting logistical issues would mean a lag between passage of the bill and actual availability of those raised-limit loans...

O-Joe,

Not sure where you get your pre 50's stat,

I do know that many claim the current downturn is the first like it since the great depression and that Greenspan himself said that a national housing downturn was unprecedented and unlikely.

Apparently Greenspan was unaware of your stats as well.

Bacon Dreamz:

Thanks for posting Lockhart's statement. In a sane world, Congress would listen to him. To what extent does he have the authority to keep the GSEs from doing foolish (or more foolish) things?

They would be better to simply give the 145 billion to the monoline insurers in my opinion, would cover maybe half the losses?

Rob Dawg - I know, I was just making a light hearted point - but really it points out there is pent up demand.

stealthwii - I own a house, if I did not own one, I might consider buying one now. The Orlando market is way off its highs and there are some bargains out there. I could be wrong, but I don't think we are going to see home prices in our area selling for less than $100/ sq ft, but I could be wrong - and the bargains now are closer to $120 / sq ft. Now if the 30 year mortage goes over 7% prices will really drop - but I think the fed prefers stealth inflation.