In case you were still harboring a tiny bit of optimism about the U.S. housing sector, just take a look at a couple of headlines from Jan. 8. KB Home (KBH) President and Chief Executive Officer Jeffrey Mezger said in a conference call with investors that he sees “no sign” that the sinking housing market is stabilizing in 2008, after announcing a staggering $9.99 loss per share in the last quarter of 2007.
On the same day, shares of Countrywide Financial (CFC) plunged as the mortgage lending giant denied rumors it is facing bankruptcy.
“Slow-Motion Train Wreck”
“The housing correction continues to be similar to a slow-motion train wreck,” wrote Deutsche Bank (DB) economist Peter Hooper in a recent analysis of the outlook for the housing market.
KB Home’s loss last quarter was much worse than expected, even though $6.85 of the loss per share is a tax-related accounting adjustment. Analysts had been expecting a loss of $1.34, according to Reuters Estimates (RTRSY).
That is a bad sign for other homebuilders this earnings season. “This points to continued pain and continued significant impairment charges for the industry,” wrote Michael Rehaut, an analyst at JPMorgan Chase (JPM).