Monday Morning: Weakest Home Builder Sentiment in 16 Years

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A couple of negative developments this morning on the national real estate front:

The National Assn. of Home Builders reports that an index of sentiment among U.S. home builders fell in June to the lowest level in more than 16 years.

The home builders blamed tighter lending practices and rising mortgage rates. The outlook among home builders hasn’t been this negative since February 1991, when the nation was suffering through the recession that helped drive George Bush The Elder from the White House.

The other bad news: Moody’s Investors Service has downgraded 131 investment securities backed by subprime, second-lien mortgage loans, saying loans of that type issued in 2006 are ‘defaulting at a rate materially higher than original expectations.’

More from Inman.com: ‘The loans were ‘originated in an environment of aggressive underwriting and lack protection from homeowner equity,’ Moody’s said.’

Not clear if there is a connection to the Moody’s downgrade, but worth tossing into the mix: CNBC reports that Merrill Lynch has postponed an auction of the assets of a Bear Stearns hedge fund that had been hammered by losses on bonds backed by subprime mortgages.

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Photo Credit: AP