[PEN-L:29971] US: Housing Market

[Sabri Oncu <soncu@xxxxxxxxxxx>]

US housing executives offload stock
By Peronet Despeignes in Washington

Financial Times, August 28 2002

Executives across the US home-building industry have been selling
shares in their companies at a record pace this year, suggesting
they believe the country's housing market has peaked.

Data compiled for the Financial Times show that corporate
officers and board members in publicly traded US building
companies sold a record $258m-worth of shares more than they
bought in the second quarter.

It is the largest net sale of stock in the industry in quarterly
records going back to 1996, and was done either by exercising
options or directly cashing in stock grants. In many cases,
corporate officers have sold more than 50 per cent of their
holdings over the past year.

"This is an anomaly," said Lon Gerber, a research director at
Thomson Financial, the information services group, adding that in
many industries such selling had fallen.

The selling went on while home sales, home values and builders'
stock prices were surging. In addition, most stock analysts were
maintaining buy recommendations and economists were debating
whether the industry was experiencing a bubble effect.

Thomson Financial and The Washington Service, a consulting firm
prepared the figures from corporate filings to the Securities and
Exchange Commission. The data show that of the 16 homebuilders
with the largest market capitalisation, seven had reduced their
executive shareholdings by the largest amount seen in individual
records going back two decades.

Executives at another three companies engaged in share selling
well above their average in the last 30 days, according to
Bernard Fulk, a senior analyst with The Washington Service.

Debate has intensified in recent months about whether the housing
market, a mainstay of growth for the US economy in the past year,
is a bubble that will gradually deflate or abruptly pop.

Policymakers such as Alan Greenspan, Federal Reserve chairman,
have dismissed the speculation, saying home values are supported
by low mortgage rates and land shortages.

Some analysts, however, fear home values may be increasingly
fuelled by excess credit, a subsequent deterioration in lending
standards and unsustainable expectations among prospective home
buyers for more double-digit percentage gains. In some
metropolitan areas, home prices have risen by more than 20 per
cent over the past year.

David Seiders, chief economist for the National Association of
Home Builders, said the group expected housing numbers "to top
out sort of right around now - housing isn't going to be the big
engine of growth forever - but we don't expect them to recede
much".

Rise in the value of the average home by
metropolitan area (per cent change from
2001-Q2 to 2002-Q2)
________________________________________
Nassau-Suffolk,NY                   29.6
Bergen-Passaic,NJ                   24.7
New York-North NJ-Long Island,NY    22.3
San Diego,CA                        21.3
Monmouth-Ocean,NJ                   21.0
Washington,DC/MD/VA                 20.8
Providence,RI                       20.7
Los Angeles-Long Beach,CA           18.0
Miami-Hialeah,FL                    17.0
Anaheim-Santa Ana,CA                16.6
________________________________________
Source: National Association of Realtors

There are various explanations for individual sales of stock,
including routine profit-taking.

However, Mr Gerber called the industry-wide trend disconcerting,
adding that "the insider signal is generally one to two quarters
ahead of turns in the stock price". He speculated that executives
may be worried about the risk of a slowdown, if not a reversal,
and were not waiting.

Homebuilder share prices have surged over the past year,
outperforming most of the stock market, as mortgage rates have
slid towards 30-year lows. But they have been volatile over the
past few weeks, declining sharply in June and July before
recouping some of their losses in August.

The great majority of the homebuilder stock analysts monitored by
First Call analyst Chuck Hill have maintained "strong buy", "buy"
or "hold" recommendations. Only one, Barbara Allen of Arnhold and
S. Bleichroeder, has recommended "sell".

She told the FT that the bubble speculation was "a little bit
stretched, but it does seem to me there's a little too much
optimism, and that Mr Greenspan is doing us a disservice with
some of the statements he's been making about homebuying."


++++++++++++++++

Report sends US builder stocks lower
By Peronet Despeignes in Washington
Financial Times, August 29 2002

Stock prices for US homebuilders eased on Thursday following a
report by the FT of record selling of company stock by
homebuilding executives.

Shares in Centex, KB Homes, DR Horton, Pulte Homes and MDC
Holdings fell more than 2 per cent. However, trading was thin
ahead of the Labor Day weekend.

The net value and number of shares sold by homebuilder officers
surged to a record pace this year.

The FT reported on Thursday that the net value and number of
company shares sold by homebuilder officers surged to a record
pace this year, according to figures compiled for the FT by
Thomson Financial and The Washington Service.

Executives and board members sold a record $258m worth of shares
more than they bought in the second quarter - double the previous
record - and the net number of shares sold was the highest on
record for seven of the 16 largest homebuilders. For an
additional three, selling in the past 30 days had been well above
average.

"In most of the industries we survey, insider-selling has
actually been falling," said Lon Gerber, director of insider
research at Thomson Financial. "I can't think of any other
industries in which we've seen such record levels of selling."

Debate has intensified recently about whether the housing market
is a bubble, but Alan Greenspan, Federal Reserve chairman, and
other top policy makers have argued home values are well
supported by land shortages, heavy immigration and other factors.

Mr Greenspan has said the market - because of its local nature
and high transaction costs - does not lend itself to a nationwide
bubble. Others contend that a moderate slowdown is more likely
than a sharp drop.

John Krainer, an economist with the San Francisco Fed who
recently examined the industry, warned: "We can never really know
for sure whether we have a bubble until after the fact, because
we never really know for sure whether the expectations supporting
asset values are justified."

The great majority of the homebuilder stock analysts monitored by
First Call continue to maintain "buy" or "strong buy"
recommendations. Only one, Barbara Allen, of Arnhold and S
Bleichroeder, has recommended "sell".