I'll Huff and Puff and Blow Your House Down

Lennar Corp, one the the country's largest homebuilders reported today that it's profits dropped 73%. They are also saying that spring doesn't look like it's going to pull them out of this mess. Not only that, the company says it won't even issue a financial forecast. Wow!

It's pretty bad when a company can't even say how the year will turn out.

It's not a complete surprise. The housing slide is a big story and has been talked about constantly. Most people can discuss sub-prime as if they were a mortgage broker.

What is worthy to note is that the stock market keeps hoping that the housing market will turn around quickly. It waits to pick out that glimmer of hope each time a new housing report is released. Then if there is upbeat data, the stock market gets beaten with a 2×4.

Today, S&P released a housing index number showing that prices of single family homes have fallen. Again, this is no surprise. The stock market knows home prices have been falling. Yet, the Dow dropped like a shingle off the roof.

The REAL worry is that with the continuing bad news, consumers will finally put their wallets away. No more home equity loans to juice the bank account. Homeowners will actually have to live off their incomes and this frightens the credit fueled economy.

The wolf is outside the door and he's huffing and puffing. The sub-prime wolf may blow this house down.