Where is the bottom of the housing slump?

A report today from the biggest homebuilder in the nation, Lennar, suggests that the market will soon be testing new lows.

Lennar swung to a loss of $513.9 million in the third quarter, compared with a profit of $206.7 million in the quarter a year ago. Revenue from home sales tumbled 44 percent, to $2.2 billion.  The results included $344.7 million in losses on land sales.

More signs of weakness in housing came today. The National Association of Realtors reported that sales of existing homes fell 4.3 percent in August, to an annual rate of 5.5 million, the slowest pace since August 2002.

"The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through,"  said Lawrence Yun, the Realtors' senior economist. He added that he expected similar results for home sales in September.

 
This year, home prices are likely to decline on a year-over-year basis for the first time since the Depression, says Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, according to Bloomberg News. 

 "It is already well documented that the housing market has continued to deteriorate throughout our third quarter," Lennar's chief executive, Stuart Miller, said in a statement. "Heavy discounting by builders, and now the existing home market as well, has continued to drive pricing downward. Consumer confidence in housing has remained low, while the mortgage market has continued to redefine itself, creating higher cancellation rates."

The company says it has cut its work force by 35 percent and that it expects "continued reductions in the fourth quarter."

The report from Lennar sounds a much bleaker tone than was heard from home builders earlier this year.

In December, the chief executive of Toll Brothers told investors that "we may be seeing a floor in some markets."

Months later, home builders have been trying to dig themselves out of the basement. A week ago, Hovnanian Enterprises sought to rev up sales by discounting some of its homes by as much as 30 percent.