Overnight in the U.S. the National Association of Home Builders/Wells Fargo housing market index has fallen to 16 year lows.
“This weakness suggests we should not expect a sustained rebound in starts anytime soon,” wrote Drew Matus, an economist with Lehman Bros.
Data from the Federal Reserve would suggest at least 44% of domestic banks (23 of 53 surveyed) have tightened mortgage lending standards in wake of the collapse of the subprime lending market earlier this year. 31% was considered to have “considerably” tightened credit standards. This is the largest tightening in the seventeen year history of the survey and probably one well overdue. While most of the reform happened in the subprime and ALT-A space, there was reports some banks were also tightening prime lending practices.
Meanwhile, in the existing home market, home prices have fallen to a new two year low. Declines were observed in almost half of U.S. cities.
With the tightening of credit, and declining prices leading to negative equity, many home owners are finding it harder to refinance leading to 147,708 default notices, auction sales letters and bank repossessions last month. This is a 62% jump from the same month in the previous year where 91,168 filings were recorded.
» Home builders’ confidence falls back to 16-year low – Market Watch, 15th May, 2007.
» Banks tightening mortgage-lending standards: Fed – Market Watch, 15th May, 2007.
» U.S. Median Home Price Tumbles to 2-Year Low in Slump – Bloomberg, 15th May, 2007.