"The housing market is looking sicker by the day"

From BusinessWeek:

Builders Brace for a Housing Downturn
Even this typically sunny sector is expecting prices to fall as prelude to a prolonged downturn

The housing market is looking sicker by the day. On Sept. 7, the perpetually optimistic National Association of Realtors acknowledged for the first time that housing prices are likely to fall on a year-over-year basis, at least for a time.
...
Mortgage rates, shmortgage rates. No one's paying attention to the cost of borrowing money these days because it seems trivial next to the risk of losing money by buying high and selling low—catching a falling knife, in the Wall Street vernacular.

Ian Shepherdson of High Frequency Economics, an early bear on housing, said in a conference call with clients on Sept. 7 that the housing market is so far gone that "it's not rescuable anymore. The housing market is beyond the control of the Fed." He compared it to a football game played on a mountaintop. Once the football goes off the edge, he said, it doesn't stop until it reaches the very bottom.
...
Even the homebuilders, long an optimistic bunch, are all but throwing in the towel on the current market's condition. "We're running our business today as if we're in a prolonged downturn," CEO Ara Hovnanian of Hovnanian Enterprises told analysts Sept. 6.
...
In boom times, when home prices were rising 16% a year and many buyers expected that pattern to continue, they could borrow at 6% and, in effect, be paid 10% a year for living in their homes. Now that annual appreciation is roughly 0% and interest rates are roughly the same, says Shepherdson, the real cost of living in a house has increased enormously.
...
"The housing market party is over," economic forecaster Global Insight said Sept. 7. While not as bearish as High Frequency, it's predicting that housing starts will fall 10% this year and 13% in 2007. It predicted that second-half 2006 growth will average just above 2%, with housing being the main negative.
...
High Frequency Economics' Shepherdson argues that housing could remain weak for another two or three years. "This," says Shepherdson, "is pretty much an inexorable process."