Piling on more proof that the housing boom is over, the Commerce Department reported Thursday that new home sales fell by 4.3 percent last month to a seasonally adjusted annual sales pace of 1.072 million units. The decline was the largest since an 11.5 percent plunge in February.

As far as consumer sentiment goes, though, look no further than a poll this morning on Yahoo Finance.  Looks like roughly 75% of respondents think that housing is headed down further.  Stay tuned...

The slowdown in the once-sizzling housing market is spreading, with 28 states and the District of Columbia reporting spring sales declines, led by big drops in former boom areas of Arizona, Florida and California.

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For all of you from Tucson, looks like you've made the list this year! 

This week, several reports were released with conflicting data about the state of the New York City market.  I'll break down some of the highlights:

• A report by broker Prudential Douglas Elliman's showed a mean price gain from the first quarter to the second quarter of 6.6 percent, to $1.37 million. The median price gained 6.7 percent, to $880,000.
• A second report, by The Corcoran Group, showed that the mean sales price declined 3 percent in the quarter, to $1.247 million. The median fell 3 percent to $775,000. The Corcoran Group also showed 3 percent declines for the year.
• There were an average of 7,640 apartments listed for sale in the second quarter, from 6,904 the prior quarter and 4,965 a year ago, according to Prudential Douglas Elliman. Time on the market also lengthened, to 144 days - that's six days more than the prior quarter. Corcoran found a similar trend.
• The Mean negotiated discount was 3.5%. 

Rising interest rates are causing would-be homebuyers to take a second look at many are opting for rentals.  This is causing rents to rise:

• The mean rent reached a whopping $3,970 for leases signed last quarter, up 15 percent in a year. Median rent was $2,900, up 9 percent.
  

Some important things to note here are that 1) traders are betting that Miami has the largest decline over the next year (7.67%) and that 2) The Top 10 City average is roughly a 5% drop.  If you're looking for evidence of a complete bust, perhaps this "soft landing" evidence isn't welcome news. 

The Commerce Department reported that building activity dropped by 0.4 percent in May to a seasonally adjusted annual rate of $1.206 trillion following a 0.2 percent fall in April. It marked the first time in more than three years that construction spending had fallen for two consecutive months. May represented the biggest one-month decline since a 0.7 percent fall in September 2004.

Analysts are forecasting that construction will drop off this year in large part due to rising mortgage rates. 

Excerpt: 

As I highlighted yesterday, it isn't the top 10% of households who will suffer in the 2007 housing bust recession. They control over 2/3 of the private wealth of the nation No, it's the 50% of households whose share of national wealth is a meager 2.5%. That 50% comes to about 150 million people.

"ARMs are a ticking time bomb," said Brad Geisen, president and chief executive of property tracker Foreclosure.com. "Through 2006 and 2007, I'm pretty sure we'll see a high volume of foreclosures."

Phoenix's housing market has some definite signs of trouble.  New data that includes used and new houses shows Valley home prices are down as much as 20 percent from last year's high. Prices aren't down all over, but some areas are showing steady declines.

The median price of a used home in Pinal County fell to $211,500 in this year's first quarter. That's down from the $220,000 the typical existing home was selling for at the end of 2005.

Home builders began offering incentives early this year to try to sell their backlog of new houses in metropolitan Phoenix.

The deals keep getting better, signaling the market isn't.

Late last year, investors began walking away from deposits on new homes because they couldn't flip houses for quick profits as they did early in 2005. Regular buyers can't sell their houses to clear the way for them to close on new ones.

More than 64,000 new homes went up Valley-wide last year, but analysts say there weren't real buyers for that many. So far this year, new-home building is down 17 percent.

So builders are offering incentives worth as much as $100,000 to unload them. 

Full article text after the jump...

 
San Diego County housing prices took their biggest-ever spring stumble last month as the median sales price fell to $490,000, down $15,000 from the previous month.

 The median price was just $2,000 higher than it had been a year earlier and was down 5 percent from the record level of $518,000 it reached in November, according to DataQuick Information Systems.

Much of the decline is being attributed to drops in prices on condo conversions as well as builder's discounts on asking prices. 

• On a recent conference call, Ara K. Hovnanian, the president and chief executive officer of homebuilder Hovnanian Enterprises Inc. said that real estate investors "have largely pulled out. Investors were a bigger part of the market than many thought, including ourselves," said Hovnanian, whose company builds primarily in the Northeast. Would-be flippers are not only not buying new properties, they're selling what they already own, adding to the record number of homes already on the market.  With land prices falling in some areas, Hovnanian has walked away from about $5.6 million of deposits on land parcels it had options to buy, lopping 5 cents a share off the company's second-quarter earnings.
  

• Wachovia last week cut its rating on builders including Pulte Homes Inc., KB Home and DR Horton Inc., citing a sharper more rapid downturn in the market than expected.

• The Fed's target short-term rate is currently 5 percent. If it passes 7 percent, "then things get very tricky," a commenter said. "Many home owners will have trouble making payments. We'll see significant mortgage credit problems develop." By the end of 2004, 35 percent of buyers had adjustable-rate loans, up from 18 percent the previous year, according to the Federal Housing Finance Board's interest rate survey. Those buyers could see a steep increase in their monthly payments if interest rates spike. That, in turn, could cause increased defaults and foreclosure sales at low prices.