Mixed Week for Real Estate Funds

It was a bad week for homebuilders. Not only are banks tightening credit standards, dooming potential home sales, but home prices are still falling, which means would-be home buyers have every incentive to wait and see if they can get a better deal.

On Tuesday, the National Association of Realtors reported that sales of existing homes were at their lowest level since August 2002, sinking another 4.3% in August to an annual rate of 5.5 million homes.

We now have a record number of homes for sale. It would take 10 months, the longest period on record, to work through the supply of homes at the current sales rate.

The inability to sell existing homes has washed away the foundation below U.S. homebuilders trying to sell new homes. ...