Economy: US housing market falls, hits retail

According to research published in the USA today, the US housing market falling faster than at any time in the past five years. And businesses related to the market are already showing signs of significant slowdown.

Home Depot, the USA's largest retailer of DIY products, is seeing a notable slowdown in its retail business.

But the biggest sign of concern in the market is not the sales per se, it's the fact that Home Depot is struggling to sell one of its business units. Home Depot Supply is not a retail business as such. It supplies the commercial market, much of it "on account." The unit's customers are builders and renovators. If they think they will have trouble selling completed projects, then they are less likely to start them. And those that have part completed projects, expecting rising prices, may find that they make little or no profit - or worse, a loss.

That means that there's every reason for potential buyers to revalue the deal - both on a projected sales and a credit risk basis. And we are not talking about a small revaluation: according to the New York Times, the figures are being renegotiated by up to USD2 milliard.

The NYT says "The Home Depot deal involves some of Wall Street’s biggest players. The buying consortium includes the Carlyle Group, Bain Capital and Clayton Dubilier & Rice, and the banks financing the deal include Lehman Brothers, JPMorgan Chase and Merrill Lynch." That reads like a roll call of banks and funds already suffering from direct involvement in the sub-prime market.