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HOME WRECK

Home prices are skidding at their fastest rate in 37 years as the housing recession scattered more industry leaders into retreat and possible bankruptcy.biz037.jpg The big discount mortgage broker, Foxtons, said it will pull out of the U.S. market, close its offices in New York, New Jersey and Connecticut, and probably file for bankruptcy.

And KB Home, the nation’s fifth largest homebuilder, yesterday posted losses steeper than expected, with half of its deals canceled amid a write-off of $690.1 million in the value of land it holds.

KB chief Jeffrey Mezger said he doesn’t see a recovery anytime soon, adding that “rising foreclosure rates are intensifying the problem of surplus inventory and will likely drive further home-price reductions.”

The slump also pushed the dollar to new lows yesterday against world currencies, with the euro hitting a record high of $1.4189.

Meanwhile, a more pessimistic forecast from Fannie Mae, the largest source of U.S. mortgage money, said the housing recession is likely to last even longer into 2009.

“We don’t think we [will] hit a bottom until the end of ’08 and then we have some period of time to work our way back up again,” said Fannie Mae chief Daniel Mudd.

The gloomy outlook from Fannie Mae, which backs up about 40 percent of the $11.5 trillion in U.S. home loans, spooked credit markets, causing the risk to rise for owning corporate bonds in a weakening economy.

A separate report for the Commerce Department said new-home purchases declined 8.3 percent last month to an annual pace of 795,000, the lowest level in more than seven years. The median price dropped 7.5 percent from August 2006, the most since 1970.

The credit crunch has been blocking potential homebuyers in areas such as metropolitan New York, where prices are higher. The supply of jumbo mortgages – those exceeding $417,000 – has essentially dried up, brokers say.

What’s more, the National Association of Realtors forecasts the first national decline in the U.S. median home price since the Great Depression.

Existing-home sales will fall 8.6 percent in 2007, according to the Chicago-based Realtors group, which represents 1.3 million real estate agents.

The predicted drop exceeds the 6.8 percent estimated by the group a month ago. The association has lowered its forecast nine times this year.

Foxtons said it fired almost all of its 380 employees as it closed offices which listed 4,400 homes. “The company no longer has the liquidity to operate,” General Counsel John D. Blomquist said.

KB Home said it lost $35.6 million, or 46 cents per share, compared to a profit a year earlier of $153.2 million, or $1.90 per share. Revenue fell 32 percent to $1.54 billion. Cancellations rose sharply in the last month to 50 percent from 34 percent the prior month.

Source: NYP 

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