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The Honolulu Advertiser
Posted on: Friday, August 11, 2006

Housing's 'soft landing' in doubt

By Annette Haddad
Los Angeles Times

Key housing industry players Countrywide Financial Corp. and Toll Bros. Inc. said mortgage demand and new-home sales were falling more than expected, raising fresh concerns that the United States' real estate slowdown might be deepening.

Some experts and industry officials are beginning to question whether the widely expected "soft landing" — in which home sales and prices level off — might be replaced by a harder, more prolonged decline.

"It appears as though (the slowdown) will last for at least six months more; it may last for two years more. We don't know," Toll Bros chief executive Robert Toll said Wednesday. The luxury-home builder based in Horsham, Pa., reported that its home orders in its most recent quarter were cut in half while revenue fell compared with a year earlier.

Toll had been among the industry's bulls, saying as recently as last spring that real estate would rebound later this year.

Calabasas, Calif.-based Countrywide, the largest U.S. mortgage lender, said that its July loan volume fell 19 percent, more than expected. The company reported double-digit declines in adjustable-rate, home equity, sub-prime and pay-option lending. It reduced its staff by 382 employees last month.

"People are overly optimistic about this 'soft landing' as to real-estate values," Countrywide chief executive Angelo Mozilo said. He predicted that home prices would be flat this year because of a buildup of new and existing unsold homes, particularly in California, Florida and New York.

San Diego-based sub-prime lender Accredited Home Lenders Holding Co. also lowered its profit outlook for the year because it expected lower loan volume and sales.