Point of No Return

Minyanville professor Fil Zucchi has posted another stunning chart on Credit Default Swaps of homebuilders.

Homebuilder Credit Default Swaps 2007-11-19



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For Comparison Purposes here are the last two charts.

Homebuilder Credit Default Swaps 2007-11-08



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Homebuilder Credit Default Swaps 2007-09-25



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Changes Since September 25

Standard Pacific (SPF)  1693.8-899.2 = +794.6
Beazer Homes (BZH)..... 1134.3-912.8 = +221.5
Hovnanian (HOV)........ 1054.2-799.2 = +255.0
Lennar (LEN)............ 533.8-281.0 = +252.8
Pulte (PHM)............. 419.9-360.7 = + 59.2
KB Homes (KBH).......... 380.0-351.7 = + 28.3
Horton (DHI)............ 406.8-345.0 = + 61.8
Centex (CTX)............ 392.0-280.0 = +112.0
Ryland (RYL)............ 316.7-205.0 = +111.7
Toll (TOL).............. 299.8-245.0 = + 54.8

Changes Since November 8

Standard Pacific (SPF)  1693.8-1316.0 = +377.8
Beazer Homes (BZH)..... 1134.3-1054.8 = + 79.5
Hovnanian (HOV)........ 1054.2-949.1  = +105.1
Meritage (MTH).........  860.0-780.0  = + 80.0
Lennar (LEN)............ 533.8-459.5  = + 74.3
Pulte (PHM)............. 419.9-393.1  = + 26.8
KB Homes (KBH).......... 380.0-342.4  = + 37.6
Horton (DHI)............ 406.8-362.8  = + 44.0
Centex (CTX)............ 392.0-362.0  = + 30.0
Ryland (RYL)............ 316.7-287.5  = + 29.2
Toll (TOL).............. 299.8-275.8  = + 24.0
MDC Holdings (MDC)...... 174.3-159.3  = + 15.0

Meritage (MTH), and MDC Holdings (MDC) were not listed in the first chart.

Back in march, Standard Pacific, Beazer Homes, Hovnanian all had CDS spreads at 200+ basis points. Currently Lennar is deteriorating at a very fast rate. Is this due to its mothball strategy? For more on this idea please see Lennar's Mothball Housing Strategy Doomed To Fail.

Whatever the reason, it seems likely that Standard Pacific, Beazer Homes, and Hovnanian have all reached the point of no return. In addition, Meritage and Lennar are rapidly losing ground on a percentage-wise basis.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com
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