by Calculated Risk on 8/17/2005 09:47:00 PM

Danielle DiMartino surveys this week's housing stories for the Dallas Morning News: First the National Association of Home Builders survey:

The housing market index of the National Association of Home Builders declined three points to 67 in August.
...
"This relationship suggests to us that the purchases of new homes could turn soft in the near term," Northern Trust economist Asha Bangalore wrote recently.

On the FED and lending standards:

... the Federal Reserve's latest Senior Loan Officer Opinion Survey, it was apparent that, as the Bank Credit Analyst put it, "The Fed speaks but banks don't hear it."

A quick history lesson: In the past, bankers tightened up lending standards to match the degree of Fed tightening.

"This makes sense, because rising rates boost the odds of loan defaults," the BCA noted. "This time, banks are ignoring the Fed. The new survey shows an increasing willingness to make consumer loans."

And on the Housing ATM:

...fresh news out of mortgage giant Freddie Mac on Americans' insatiable appetite for cash to fuel their runaway spending habits.... Thanks more to increasing home values than interest rates, in the first half of this year, cash-out refinancings have totaled a record $102 billion.

And from Freddie Mac:

Total equity cashed out in the second quarter is estimated at $59 billion, up from the revised cash-out estimate for the first quarter of 2005 of $43 billion.
... homeowners extracted $140 billion in home equity through first lien refinances in 2004."

Home Equity Extraction:
2001: $83 Billion
2002: $96 Billion
2003: $139 Billion
2004: $140 Billion
2005: $102 Billion (first 6 months)

From former Fed chief Paul Volcker (quotes and video link - worth a repeat):

"Altogether, the circumstances seem as dangerous and intractable as I can remember."

"Boomers are spending like there is no tomorrow."

"Homeownership has become a vehicle for borrowing and leveraging as much as a source of financial security."