MarketWatch: Housing starts expected to fall again

[NVMojo]

September 17, 2006

WASHINGTON (MarketWatch) -- The fragile U.S. housing market probably weakened further in August and early September, economists said, looking ahead to the coming week's economic data.

Home builders have turned very sour on their industry as inventories of unsold houses soar, canceled orders pile up and prices sink.
The week's calendar will offer two views of the home builders: what they do and what they say. In both cases, the story's the same: grim.

The housing reports will be the highlight of a week that also features a meeting of the Federal Open Market Committee on Wednesday and the release of the August producer price index on Tuesday. (See Economic Calendar.)

On Tuesday, the Commerce Department will report on housing starts and building permits for August. On Monday, the National Association of Home Builders will release its housing market index, a sentiment survey of builders.

"The situation in the housing market is precarious," said Brian Bethune and Nigel Gault, economist for Global Insight. "Emotions could start to play a greater role in builders' decisions, adding downside risk to the numbers."

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http://www.marketwatch.com/News/Story/Story.aspx?guid={D99C5CF1-B83F-45E9-9D7D-B830FD1806E9}&siteId=google

[still_one]

1. That may be, but the U.S. stock market is focusing on interest rates

and lower gas prices which they believe will spur consumer spending

In fact, as far as they are concerned consumer debt is good for the economy

Even if there are defaults or forclosures, in many cases the lender will already have made their money back from the interest rates they have been charging for the loans, and if they haven't, with the wonderful new bankrupcy law they have the ability to eventually get the full debt paid back.

The unfortunate thing is that this encourages lending institutions to make risky loans, while at the same time the lower interest rates encourages consumers to get into debt even more.

[NVMojo]

2. good points, still one, the financial industry can continue to operate

in a cavalier and capricious fashion with all of the protections in place just for it and not for the debtors.

[still_one]

3. I agree, it is quite reckless

I sense that people were using the low interest rates to obtain home equity loans and refinancing which helped spur consumer spending. If the housing market has a hard landing, this could mess everything up. Whatever happens, it won't happen until after the November election

[NVMojo]

4. excellent explanation here on predatory lending

http://robblack.typepad.com/