Look out below!

Mortgage short sales will kill the home builders. Soon you will see them everywhere, as banks allow people to drop prices on their homes and sell them for less than the loan, in order to avoid foreclosure. I'm already starting to see "mortgage short sale" advertisements in the papers.

I think that this could easily drop home prices 10%+ nationwide. The homebuilders will drop workers like crazy. The Fed's been watching employment, but remember, employment is a lagging indicator. The spring season was a complete bust for the homebuilders. I think that the next employment numbers will be much worse than last month. It will be well worth watching them when they come out.