Is the US housing market crumbling?

Update: read US subprime woes start to spread for more insight on the US housing market.

We have repeatedly said that the key indicator for most of the world’s major stock markets is the US housing market. The Philadelphia Housing Market Index has now fallen to its major support level of 225. Any further weakness from here would be a prelude to a shock.

Because of the importance of this indicator, it has been our policy each fortnight to publish the latest news from the US housing market – it is getting worse!

Ten Las Vegas house projects have been halted or put on hold.

Toll Brothers, one of the major luxury house builders in the US, have said that their second quarter orders were down 33%.

Not surprising, bearing in mind the above, the National Association of House Builders say that the industry’s confidence is the lowest it has been since 1995.

According to the Washington Post a greater proportion of mortgage financers tapped their home equity for cash in the first quarter 2006 than any other quarter in 15 years. More than 50% of these applicants borrowed at higher rates. 

One of America’s leading mortgage lenders, Ameriquest, is closing 229 branches and laying off 3,500 employees.  (A clear indication of sharply lower activity.)

According to the Commerce Department, housing starts in April were down 7.4% at an annual rate of 1.85 million, the third consecutive monthly decline and the slowest since November 2004.

According to the Wall Street Journal, late payments on mortgages are rising. Delinquencies are sharply higher on loans made last year. 

According to a recent study, 29% of 2005 purchasers now have no equity in the homes.

America’s new jobs figure for March was 138,000 – economists had estimated 200,000. 138,000 is the lowest since October last year and it followed three months of downward revisions. 

The University of Michigan’s Consumer Confidence Index for April was 79, compared to 87.4 in March, the lowest since Hurricane Katrina.

Lombard Street Research said this week that the US economy had peaked and was tipping into an unstoppable bust. The property market is crumbling – “the real US hard landing starts now”.

By John Robson & Andrew Selsby at RH Asset Management Limited, as published in the Onassis Newsletter, a fortnightly newsletter that gives insight into the investment markets.

For more from RHAM, visit http://www.rhasset.co.uk/

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.