John Murphy Reports

Miami, Florida based, Lennar, reported quarterly results today that continue to show the massive difficulties America’s home builders face in this real estate market.  Despite Lennar’s ability to cut expenses by 60% or $238.9 million for the quarter, the company still lost $120.9 million for the quarter.  Overall sales volume was down 61% compared to the same quarter last year! (emphasis added).

Lennar is Minnesota’s number one homebuilder in terms of units and sale volume.  I do not know the comparison information specifically for Minnesota.

Here’s the article that ran on Forbes.com.

One year chart of Citi Group.  The stock market acts as a discounting measure.  Typically it’s about 6 months ahead of the rest of the economy.  The housing market is driven by money on Wall Street which is driven by the big Wall Street banks.  Citi Group is hitting a 9 or 10 year low as of today.

The latest existing homes sales reports a 2% increase in sales for May 2008 compared to April 2008.  Median prices continue their decline down 6.3% from a year ago.

Inventory is slowly being worked off the market:

The inventory of unsold homes dropped by 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from a 11.2-month supply in April. That’s still about double the inventory level that existed during the five-year housing boom.

This report comes on the heels of the Census Bureau’s new home sales report earlier this week that showed continued anemic activity new construction across the country.  Calculated Risk has some excellent commentary on the subject.  They also published excellent graphs depicting the decline in new construction inventory.

The key things that I see are:

1) New construction inventory is finally falling

2) Pending sales activity is up

3) Listing inventory is starting to decline

4) Still have between 10-11 months of inventory nationwide.  This doesn’t need to come back to 5 months, but the market would feel very different if this inventory level made it’s way back towards 7 months.  Perhaps we’ll see that by next spring.