Five Things You Need to Know: Existing Home Sales Off, NAR Blames Housing; Countrywide Forced to Change Loans, Blames Housing; Centex Cuts 3,500 Jobs, Blames Housing; AutoNation Profit Off, Blames Housing; Nissan Plans $2,500 Car, Blames Housing
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Existing Home Sales Off, NAR Blames Housing
Sales of previously owned U.S. homes fell more than forecast in September, according to data from the National Association of Realtors Now Moonlighting in Everything From Property Management to Department Store Sales to Teaching.
- According to the NAR, the primary culprit in the existing home sales decline is housing.
- Overall existing home sales declined to a 5.04 million annual rate, an 8.0% decrease from August's downwardly revised 5.48 million annual pace, the National Association of Realtors reported.
- Expectations were for a rate of 5.25 million.
- This is the lowest pace since the NAR began accounting for single family and condo sales in 1999.
- The median home price was $211,700 in September, down 4.2% from $220,900 in September 2006.
- The median price in August this year was $224,400.
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2. Countrywide Forced to Change Loan Terms, Blames Housing
Countrywide Financial (CFC), the biggest U.S. mortgage lender, will partner with a housing advocacy group to help homeowners at risk of foreclosure by changing the terms of their mortgage loans.
- Countrywide attributed the widespread home loan restructuring program, which could total as much as $16 billion, to housing.
- We've seen this movie before, however.
- It's called desperation in the final hour.
- Lenders do not help borrowers, not on a wide scale like the CFC program, because they want to, they help the because they have to.
- This is important to note because despite the media billing the CFC restructuring as some kind of charitable-based benevolent gesture, the reality, at least from anecdotal evidence, is that homeowners have been struggling for months to get their mortgages restructured to avoid foreclosure.
- Former homeowners who have now gone through the foreclosure process have written to us in recent weeks, as rumors of the workouts with CFC began to surface, noting that in many cases they tried for months to avoid foreclosure by doing re-working their loan or even attempting a short sale,
- Many report receiving no response from Countrywide.
- But this is typical behavior at the beginning (yes, beginning) of a housing downturn.
- Recently we spoke with a man from Texas now living in New York who moved here just as the property market was collapsing in Dallas in the 1980s.
- "I came to New York with the full intention of selling my Dallas house, which at the time was just a typical house for a small family I had bought for $65,000," he said.
- "Some offers came, but in both cases their mortgages fell through. After about eight months of trying to carry a New York apartment with the mortgage I simply couldn't do it. Still, I believed that if I could make it just another 8-10 months I could eventually sell my Dallas home, even at a small loss, and come out ok. So I went to the bank to try and workout an agreement or even borrow some money to avoid foreclosure. They basically laughed at me. So I went through the foreclosure process," he said.
- And what happened to the lender who foreclosed on the property?
- "They went bankrupt within a year."
3. Centex Work Force Down 41% Year-Over-Year, Blames Housing
Homebuilder Centex (CTX), the fourth largest builder, said in a conference call this morning that it has cut 3,500 housing jobs since the fourth quarter of 2006.
- Centex said it has cut 3,500 homebuilding workers in the past year, mainly due to housing.
- The company had more than 8,500 workers at this time last year.
- Meanwhile, Centex Chief Executive Officer Timothy Eller said the housing market remains "extremely difficult'' and tighter lending standards are likely to continue.
- Yesterday the company reported is biggest quarterly loss in 17 years, recording $983 million in land writedowns and charges.
- The cancellation rate was 35%.
4. AutoNation Profit Off, Blames Housing
AutoNation (AN), the nation's largest automotive retailer, said its third-quarter profit tumbled 12% on a decline in new vehicle retail sales.
- AutoNation officials blamed the drop in sales on housing.
- Net sales fell 5.2%.
- New vehicle unit sales for California and Florida, which together represent about 50% of the company's new vehicle business - and 20% of the industry's new vehicle business - fell 11%.
- Company officials blamed the drop in sales on weak housing markets in those two states.
5. Nissan Plans $2,500 Car, Blames Housing
Nissan and Renault plan to start selling a car for about 2,500 dollars in India by the year 2010, chief executive Carlos Ghosn said.
- The company said it believes it is feasible to produce a $2,500 car for India by 2010, mainly due to housing.
- Ok, we just made that up about the housing blame, but still it illustrates the secular deflationary pressures still building in many areas.
- Chief executive Carlos Ghosn said it appeared possible to make a 2,500-dollar car for India, but the big question was whether it could be exported to other markets such as Europe, China, Brazil, Mexico or even the United States.
- Indian automaker Tata Motors plans to introduce its own 3,000-dollar car in its home market next year.
- India, of course, is one of the world's fastest-growing auto markets.
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