MORE HOUSING PROBLEMS

Lennar Reports Biggest Loss in Its 53-Year History (Update9)

By Brian Louis

Sept. 25 (Bloomberg) -- Lennar Corp., the largest U.S. homebuilder, reported the biggest quarterly loss in its 53-year history after $848 million of costs to write down the value of real estate.

The third-quarter net loss was $513.9 million, or $3.25 a share, exceeding the most pessimistic estimates from analysts and suggesting the worst housing market in 16 years shows no signs of stabilizing. Revenue at Miami-based Lennar fell 44 percent to $2.34 billion, the lowest in more than three years.
There is little evidence that home sales are recovering. Rising defaults in subprime mortgages, made to borrowers with bad or incomplete credit, has cut demand for mortgage-backed securities, stopping the flow of money to lenders and making it more difficult for buyers to get loans. Sales of new homes dropped 10.2 percent in July from a year earlier, according to the Commerce Department.
Home prices will probably fall on a year-over-year basis for the first time since the Great Depression, according to Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis.

S&P/Case-Shiller Home Price Index Falls 3.9% in July (Update4)
By Courtney Schlisserman

Sept. 25 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell the most on record in July, indicating the threat to consumer spending was rising even before credit markets seized up in August, a private survey showed today.

Values dropped 3.9 percent in the 12 months through July, steeper than the 3.4 percent decrease in June, according to the S&P/Case-Shiller home-price index. The index declined in January for the first time since the group started the measure in 2001, and has receded every month since then.
The National Association of Realtors, in a report today, said sales of previously owned U.S. homes fell in August to a five-year low.

The inventory of single-family existing homes on the market represented a 9.2-months' supply in July, the most since October 1991, the Realtors group said on Aug. 27.

Heebner, Top Fund Manager, Sells New York Real Estate (Update1)

By Sree Vidya Bhaktavatsalam

Sept. 25 (Bloomberg) -- Kenneth Heebner, manager of the top-ranked U.S. real-estate mutual fund, sold stakes in New York property owners because prices will decline as banks, hedge funds and buyout firms fire workers.
The manager, whose fund has returned an average of 40 percent a year since September 2002, cut stakes in real estate investment trusts to a quarter of assets from 75 percent in December.
At the $3.5 billion CGM Focus Fund, Heebner sold his 15 percent stake in investment banks including Merrill Lynch and Morgan Stanley during the second quarter. He said they will be hardest hit by the subprime rout.
U.S. commercial real estate prices may fall as much as 15 percent over the next year in the broadest decline since the 2001 recession as rising borrowing costs force property owners to accept less or postpone sales, according to industry analysts at Morgan Stanley and Green Street Advisors Inc.
Heebner, who had two-thirds of the real-estate fund in homebuilder stocks at the beginning of 2005, sold his entire stake by the end of that year. Homebuilder shares peaked in July 2005 and have since tumbled an average of 67 percent.