On February 16, 2007, the Census Bureau and the Department of Housing and Urban Development released the residential construction report for January, 2007.

Building Permits:

Building permits fell another 2.8% from December, 2006 to a seasonally adjusted annual rate of 1,568,000;

This is 28.6% below the January, 2007 estimate of 2,195,000; and 26% below the October, 2005 rate of 2,131,000;

Single-family authorizations in January, 2007 were at a rate of 1,121,000, 4.0% below the December, 2006 figure of 1,168,000 and 8.0% below the September, 2006 level of 1,219,000.

Housing Starts:

Housing starts fell 14.6% to a seasonally adjusted annual rate of 1,408,000, 14.3% below the revised December, 2006 estimate of 1,643,000 and 37.8% below the January, 2006 rate of 2,265,000;

Housing starts fell 27.4% from the October 2005 rate of 2,046,000; and

Single-family housing starts in January, 2007 were at a rate of 1,108,000, 11.2% below the December, 2006 figure of 1,248,000 and 21% below the September, 2006 figure of 1,400,000.

This was a record 12th consecutive decline in housing permits, as well as the lowest permit total since December, 1997. Housing permits are a leading indicator, so a further deterioration of future economic activity is to be expected.

Housing Completions

Privately-owned housing completions in January, 2006 were at a seasonally adjusted annual rate of 1,880,000. This is 1.2% below the revised December, 2006 estimate of 1,902,000 and 8.0% the January, 2006 rate of 2,044,000.

The following housing-related information is taken from selected publications, including Bloomberg, the Ft. Lauderdale Sun-Sentinel and Dow Jones’ MarketWatch:

New Home Sales, Cancellations and Housing Inventories:

On March 19, 2007, Bloomberg reported that “U.S. homebuilders turned more pessimistic this month on concern that buyers will find it harder to obtain loans after a wave of defaults in the subprime market. The National Association of Home Builders/Wells Fargo index of sentiment fell to 36 this month from February's revised 39, the first decline since September, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.”

According to Bloomberg, “The Mortgage Bankers Association said March 13 that the rate of delinquencies among subprime borrowers was at a four- year high in the fourth quarter. Foreclosures begun on all types of home loans rose to an all-time high. Toll Brothers Inc. Chief Executive Officer Robert Toll said March 15 that business is slow because customers are continuing to cancel contracts, bringing more homes onto the market. The inventory of new homes for sale at the end of January rose to 6.8 months' worth, the highest since October, the Commerce Department said on Feb. 28.”

Cancellations:

According to the Ft. Lauderdale Sun-Sentinel, “Toll Brothers, Inc., which is building several housing developments in south Florida, reported in filings with the Securities and Exchange Commission that it sustained cancellation rates of 37% in the fourth quarter of 2006 and 30% in the first quarter of 2007. The company's historic cancellation rate is 7 percent, it reported.”

Dow Jones’ Marketwatch reported on February 27, 2007 that Hovnanian Enterprises, Inc. expects to book about $90 million in charges related to operations in Fort-Myers-Cape Coral, FL., "due to a continued decline in sales pace and general market conditions, as well as increasing cancellation rates, during the quarter."

A tough Florida housing market also hit condominium and home builder WCI Communities, Inc., which reported on February 27, 2007 that it swung to a loss in the fourth quarter of $64.6 million as it booked real estate inventory impairment losses of $91.4 million. The Bonita Springs, FL.-based company said margins were hit by greater use of incentives and discounts due to rising inventories of unsold new and existing homes in its markets. "Our Florida markets, which account for approximately 85% of our business, experienced the greatest slowdown during 2006," said Chief Executive Jerry Starkey in a statement.

Foreclosures:

On March 12, 2007, Bloomberg reports that “The deepest housing decline in 16 years is about to get worse. As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to realtors, economists, analysts and a Federal Reserve governor. Financial stocks also could extend their declines over mortgage default worries.”

Bloomberg reports that “The spring buying season, when more than half of all U.S. home sales are made, has been so disappointing that the National Association of Home Builders in Washington now expects purchases to fall for the sixth consecutive quarter after it predicted a gain just last month.” According to Mark Zandi, chief economist for Moody’s Economy.com says `The correction will last another year. `Fewer people qualifying for mortgages means there will be less borrowers, and that will weigh on demand.''