Tuesday Morning: UCLA Predicts Two More Years of Housing Weakness

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Good morning.

News item: UCLA economists now predict the housing slump will last two more years in California. ‘The pipeline of mortgage resets suggests it may be mid-2009 before California sees a normal housing market again,’ economist Ryan Ratcliff says. (Aside: Funny, you hear a lot of real estate professionals saying the market IS normal right now.)

Pull quote: ‘Builders used to sell 14 homes a week; now it’s four a month,’ said Redlands-based subcontractor Randy Becker, who has laid off 40 people. ‘When I lay people off, I tell them it’s nothing personal, but I can’t make any promises.’

Another news item: The Commerce Department reported this morning that construction of new homes fell in May and is now running 24% behind last year’s pace. The May decline -- 2.1% on a month-to-month basis -- followed small gains in March and April, and was the poorest performance since January. Construction was weakest in the South and West.

Photo Credit: Reuters