US housing turning the corner....Bwaahaha

US Existing Home sales were virtually flat in May dropping -o.3% to a seasonally adjusted rate of 5.99 million. Economists had expected a softer 5.9 million, sales are down 10.3% from a year earlier. Inventories of homes on the market rose by 5% to a record 4.43 million, representing an 8.9-month supply at the May sales pace. This represents the biggest inventory overhang since June 1992, at the tail end of the last housing bust.

More data on housing arrives today, this time on New Home sales which surprised on the upside in April soaring by 16.2%. New Home sales have held up better than existing home sales in recent months so it will be interesting to see if the trend continues.

Another interesting point is that mortgage rates have surged higher since May, hitting 6.69% in the most recent week, compared with an average of 6.26% in May. The rising cost of housing finance is not going to help matters.

Further confirmation of the depressed state of US housing took the form of 2Q07 results from Lennar Corp (LEN) showing a -$244m loss in stark contrast to the previous years $324m profit.CEO Stuart Miller had this to say about the state of the housing market:

The housing market "has continued to deteriorate throughout the second quarter,"..."As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions,"

Miller also added that management expects a loss for the 3Q07.