Today’s gloomy home sales news is adding to the concern about recession.
A couple of prominent homebuilders have been quoted as saying that this housing downturn has been harsh. One said harsher than in his experience; the other said they are always harsh. See a recap of the bad news at Nouriel Roubini’s blog. Allen Sinai is quoted in the Wall Street Journal saying that the housing industry will get something "harder than a soft landing but softer than a hard landing." His description would be accurate for the economy as a whole, but the housing industry will feel like it is in recession. The rest of us will feel slower growth, but it will be dismal in the housing food chain.
Business Strategy Implications: Everyone in the housing food chain needs to hunker down. Conserve cash, cut expenses to the bone, abandon the idea that you’ve been really really smart over the last few years.