If You're Surprised, You're an Idiot!

"The pace of existing home sales in the United States fell for a fifth straight month in August and prices dropped from year-ago levels for the first time in 11 years, a U.S. realtors group said on Monday."

"The National Association of Realtors said existing homes sales slipped to an annual rate of 6.30 million units from 6.33 million in July."

"The report, however, did show prices also have begun to drop compared to the lofty levels of last year, when many parts of the country saw home prices appreciate at double-digit annual rates."

"The pace of U.S. home building fell more sharply than expected in August as builders broke ground on new homes at the slowest rate since April 2003, a government report showed on Tuesday."

"The report came a day after an industry survey showed that home builder optimism sank for the eighth straight month in September to the lowest level in more than 15 years. The closely watched National Association of Home Builders' index of homebuilder sentiment declined 3 points in September to 30, the lowest since February 1991, when the economy had slipped into recession."

"Lennar is the most recent of the U.S. home builders, along with Beazer Homes USA Inc. (NYSE:BZH - news), KB Home (NYSE:KBH - news), Hovnanian Enterprises Inc. (NYSE:HOV - news) and Toll Brothers (NYSE:TOL - news), to either post lower quarterly earnings or to cut its forecast."

"The larger publicly traded builders, which comprise about 23 percent to 25 percent of the new home market, are suffering along with the rest of the sector. According to the U.S.
Commerce Department, home starts fell 19.8 percent in August compared with a year earlier to their lowest level in more than three years."

"A steeper-then-expected drop in the U.S. housing market pushed Lennar Corp.'s (NYSE:LEN - news) quarterly profit down 39 percent and prompted the home builder on Tuesday to slash its fourth-quarter forecast."

'"Everybody knew that it had gotten a bit worse" said BB&T Capital Markets analyst Todd Vencil."

"Responding to a deteriorating market, some large U.S. builders have pulled back on the number of homes they build to protect their gross margins. But Lennar has pursued a different course -- trading margin for volume."

"Its policy has been to start a new home as soon as one is sold, with or without first finding an intended buyer and using incentives for the sale."

'"Rather than slamming on the brakes, they're trying to let the business wind itself down to whatever the appropriate level is over time," Vencil said."

'"They are clearly adding to the problem overall to the market in having too much inventory. That may work for Lennar. It's certainly allowing them to take share."'