Interest in All Things

Existing home sales fall for fifth straight month
First year-over-year decline in more than 11 years

WASHINGTON - Sales of existing homes fell for the fifth consecutive month in August as the once-booming housing market slowed further.

The National Association of Realtors reported Monday that existing home sales slipped by 0.5 percent to a seasonally adjusted annual rate of 6.30 million units.

The slowdown in sales was weighing on home prices, with the median price of an existing home sold in August dropping to $225,000, 1.7 percent below August 2005. It marked the first year-over-year price decline in more than 11 years.

The weakness in existing home sales followed a report last week that construction of new homes and apartments plunged by 6 percent in August, pushing building activity to the lowest level since early 2003.

The housing sector, which had enjoyed five boom years of record sales, has been slowing sharply this year under the impact of rising mortgage rates and a slowing economy.

David Lereah, the Realtors’ chief economist, said the drop in prices had been expected, indicating that sellers are finally starting to lower their asking prices in the face of weaker sales and soaring inventories.

The inventory of unsold homes rose 1.5 percent to an all-time high of 3.92 million units. At the August sales pace, it would take 7.5 months to sell the backlog of unsold homes, representing the longest period since April 1993.

Lereah predicted that prices would likely keep declining for the rest of the year.

“We do expect an adjustment in home prices to last several months as we work through a buildup in the inventory,” he said. “With sales stabilizing, we should go back to positive price growth early next year.”

Sales of single-family homes were unchanged at an annual rate of 5.51 million units in August, the same as July. But this sales pace was 12.3 percent lower than a year ago. Sales of condominiums fell 3.5 percent to an annual rate of 793,000 units, which represented a 14.5 percent drop from the condo sales pace in August 2005.

By region of the country, sales of existing homes rose 1.9 percent in the Northeast to a seasonally adjusted annual rate of 1.07 million units in August. The median price for a home sold in the Northeast was $271,000, down 3.9 percent from August 2005.

Existing home sales in the Midwest rose 0.7 percent to an annual rate of 1.44 million units with the median price dropping to $176,000, 1.1 percent below a year ago.

Sales in the South fell by 0.8 percent to an annual rate of 2.51 million units with the median price falling to $184,000, down 2.6 percent from a year ago.

Sales in the West fell by 2.3 percent in August to an annual rate of 1.29 million units with the median price dropping to $345,000, up 0.3 percent from a year ago.

For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

By Kirstin Downey
Washington Post Staff Writer

At a Senate Banking Committee hearing yesterday, legislators and consumer advocates prodded federal banking regulators to move more quickly to put restrictions on non-traditional mortgage lending, because, they said, the new kinds of mortgages may place borrowers and lenders at financial risk.

“It seems to me there’s been a race to the bottom” in lending standards, said Sen. Jim Bunning (R-Ky.). He said that consumers don’t seem to understand the new products, and that if real estate values continue to fall, the market “pullback” could become “a prelude to a crash.”

“There’s a plethora of new products that are destroying the lives of a whole lot of people,” said Sen. Charles E. Schumer (D- N.Y.). “These were intended for rich, sophisticated buyers but they have been sold to the least sophisticated and most vulnerable.”

The popular loans, which include various adjustable-rate mortgages, interest-only loans and what are called “option” adjustables, share a common feature in that they allow borrowers to pay less money now but require them to pay more, sometimes much more, later. Monthly payments could double or triple when borrowers are required to pay the full interest and principal on the loan, several years down the road. About half of all non-traditional loans now require borrowers to pay a hefty fee, known as a prepayment penalty, if they try to sell the home or refinance to get better terms, according to George Hanzimanolis, a mortgage broker who spoke at the hearing.

The lending industry has defended non-traditional loans as a key reason that homeownership has reached a near-record high despite steep home prices. They say the loans can be tailored to meet individual needs, rather than the one-size-fits-all loans of past decades. But consumer advocates and an increasing number of legislators have questioned whether borrowers really understand what they are doing.

Last year, federal banking regulators said they intended to issue a regulatory “guidance,” which is a kind of warning, to tell lenders to be more careful in making these loans and to make sure consumers understood them. At yesterday’s hearing, the regulators said the guidance was still a few weeks away, something they have been telling legislators for several months.

Sen. Wayne Allard (R-Colo.) pushed the bank regulators appearing before the committee to say when, exactly, the guidance would be issued. Regulators from the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said “soon” or “in a matter of weeks, not months.”

“We were hoping for something more specific,” Allard said.

Until recently, the lending industry had said the loans were being marketed to people with only the strongest financial records. But a report released yesterday by the Government Accountability Office found that about three-quarters of people whose option-ARM loans were packaged into securities in the first half of 2005 were not required to fully document their income.

The mortgage market has changed quickly, and senators and banking industry regulators and officials grappled yesterday with the ramifications. Only six years ago, most borrowers had either simple fixed-rate or adjustable-rate loans, but now more than one-third, particularly people in high-cost areas such as the District and California, have opted for the new variants, which are typically originated by mortgage brokers on behalf of lenders, who then sell the loans on the secondary market as securities. Traditionally, banks made loans to people they thought were good credit risks and held the loans or sold them to government-backed entities such as Fannie Mae and Freddie Mac, which resold many of them. But now many are sold as securities to other investors who appear to have a much higher risk tolerance.

By Jody Shenn

WASHINGTON — The views of many of the most pessimistic home-price prognosticators continue to darken.

David A Rosenberg, an economist at Merrill Lynch & Co. Inc., wrote in a research note published Monday that he expects prices to decline 5% next year; he had previously predicted they would be flat.

“Prices have already flattened over the past 12 months, and if anything, the inventory situation has deteriorated to record levels,” he wrote. The backlog of unsold new and existing single-family homes and condominium units for sale has grown 37% in the past year, to 4.4 million, he wrote.

Mr. Rosenberg also cited the low housing affordability reported by the National Association of Realtors. “It’s not a pretty picture,” except for investors who are long on “30-year zero coupon bonds.”

With no income growth and flat mortgage rates, prices would need to drop 20% for the group’s affordability index to return to its average level over the last decade, he wrote. For a 5% drop to do so, rates would need to fall 140 basis points.

But in the Aug. 15 issue of a Bear Stearns newsletter, Gyan Sinha, its senior managing director for structured product credit, reiterated his frustration with observers’ failing to understand that most affordability measures ignore the fact that fully amortizing 30-year fixed-rate loans are no longer the only real option.

He was “still surprised at the extent of the confusion regarding this issue among market commentators.” He was responding to a bearish housing article from the newsletter writer James Grant.

As an example, Mr. Sinha wrote that using only the interest-only five-year hybrid adjustable-rate mortgages most popular among California “jumbo” borrowers in affordability calculations shows that the state’s more expensive homes actually became 25% more affordable between 1998 and 2005, despite a 66% rise in prices.

He also warned against using price indexes influenced by different types of homes being sold, such as the Realtors index, to gauge the market’s direction. “House prices don’t decline simply because they have gone up too much,” he wrote, “especially when one views the experience over the last few years through the prism of the massive increase in purchasing power due to affordability products.”

Mr. Rosenberg also wrote that prices should fall next year because a 20% decline in prices — or a surge in rents — is needed to bring the ratio of prices to rents “into line” with historic norms.

“As draconian as [it] sounds, a 5% price decline would only reverse 1/10th of the price run-up over the prior five years and would shave household real estate wealth by just over $1 trillion next year,” versus the $5 trillion decline in households’ net worth from the stock implosion of 2001 and 2002.

Richard Bove, an analyst with Punk, Ziegel & Co., recently put himself in the “hard landing” camp for real estate. “We, quite frankly, have no doubt that this will happen,” he wrote in a report last week.

Banks heavily concentrated in construction and land development lending will face particularly tough times, Mr. Bove wrote; Colonial BancGroup Inc., Synovus Financial Corp., and Fremont General Corp. have the most such loans to total assets, he said.

On Monday he downgraded another high on the list, Zions Bancorp. [See story on back page.] Other ways of ranking exposure include looking at ratios of real estate assets to common equity, as well as looking for lots of option ARMs and condo loans, he wrote. “Overall, however, we do not see any ‘life threatening’ risks to the industry from a housing slowdown.” The “losses are unlikely to overwhelm any large bank,” and in his view, “mortgage lending is still the best business in banking.”

U.S. Economy: Home Sales Drop, Supply Jumps to Record
By Shobhana Chandra and Joe Richter

Sales of previously owned U.S. homes fell in July to the lowest in more than two years, a slowdown that may lead the Federal Reserve to keep interest rates steady for a second month.

Purchases declined 4.1 percent, more than economists forecast, to an annual rate of 6.33 million, the National Association of Realtors said today in Washington. Sales fell 11.2 percent from a year earlier and the supply of unsold homes climbed to a record.

The report comes a day after Chicago Fed President Michael Moskow said a sharp decline in housing, which by some estimates accounted for more than half of growth over the last three years, would be a risk to the economy. While Moskow also warned of higher interest rates to stem inflation, economists say slackening growth is more likely to stay the Fed’s hand.

“This plays into the Fed’s hope and forecast that growth is going to stay moderate and that the pressures we are seeing on inflation will be transitory,'’ said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “If they aren’t done yet, they are almost finished.'’

Shares of residential construction companies tumbled. The 16-member Standard & Poor’s Supercomposite Homebuilding Index dropped 2.7 percent. The S&P 500 lost 0.6 percent to 1290.13 at 3:21 p.m. in New York.

`Negative Report’

Yields on Treasury notes, which typically decline on signs of slowing growth or receding inflation, were little changed. The dollar erased a decline posted in the minutes after the figures were released at 10 a.m. in Washington.

“It’s certainly a negative report, but it didn’t cross the threshold into being a terrible report,'’ said Carl Riccadonna, an economist at Deutsche Bank Securities Inc. in New York.

The focus now shifts to new home sales, a more timely indicator because transactions are counted when a contract is signed. A report from the Commerce Department tomorrow will probably show new home sales declined to an annual rate of 1.1 million in July from 1.131 million in June, according to the median estimate of economists in a Bloomberg survey.

Resales were expected to drop to an annual rate of 6.55 million, the median estimate of 61 economists in a Bloomberg News survey, from June’s originally reported 6.62 million. Economists’ forecasts ranged from 6.35 million to 6.75 million.

Dwelling Prices

The median price of an existing home rose 0.9 percent in July from a year ago to $230,000, the Realtors group said. Prices dropped in some areas.

“The leveling off in mortgage rates and the fact that home prices have stopped escalating indicates there will be some relief for home buyers,'’ said Bill Hampel, chief economist at the Credit Union National Association. “I don’t think the housing market next year will be as weak as people expect.'’

Sales declines spread last month to Ohio, Michigan, Pennsylvania and some other markets that had been considered affordable and at relatively low risk of a drop in demand, said David Lereah, chief economist at the National Association of Realtors in Washington.

Weakness was expected to be concentrated in areas such as California and Florida, where prices jumped the past few years, Lereah said.

The number of unsold homes on the market at the end of July jumped to 3.86 million homes, the highest since records began in 1999. There was 7.3 months’ supply at the current sales pace, the most since 1993.

Existing home sales account for about 85 percent of the housing market and are recorded when a contract is closed.

Waning Confidence

The National Association of Home Builders/Wells Fargo’s index of builder confidence plunged this month to the lowest level in 15 years, a report showed last week.

Toll Brothers Inc., the largest U.S. builder of luxury homes, said yesterday net income in the three months ended July 31 fell 19 percent, the first drop in four years. The builder cut its fourth-quarter profit forecast as rising interest rates hurt demand for its houses, which sell for as much as $1.5 million.

The S&P Supercomposite Homebuilding Index, which includes Toll Brothers, has dropped almost 38 percent since the beginning of the year.

Resales of single-family homes fell 5 percent last month to an annual rate of 5.51 million, the report said. Sales of condos and co-ops rose 2.8 percent to an 818,000 rate.

Purchases fell in all regions of the country. They dropped 5.4 percent in the Northeast, 5.9 percent in the Midwest, 1.2 percent in the South and 6.4 percent in the West.

Industry Forecast

Lereah said the association will lower its forecast for existing-home sales. Previously, the group expected resales to decline 6.5 percent to 6.61 million in 2006, from last year’s record 7.08 million.

Some economists predict prices will fall as more homes sit unsold, especially on the new homes market, where builders and investors may cut prices to get rid of properties.

“There’s still some room for home prices to come down a bit,'’ said Bob Moulton, president of Manhasset, New York-based Americana Mortgage Group. “Buyers have much more of a choice now. All that inventory out there is going to force prices down.'’

The Fed raised the benchmark interest rate 17 straight times since 2004 to control inflation, and left the rate unchanged at 5.25 percent on Aug. 8. While housing is slowing gradually so far, a sudden slump may hurt consumer spending, economists said.

“It’s very important that the Fed understand the fragile state of the housing market,'’ Lereah said. “It’s very important that the Fed maintain the status quo, keep rates where they are.'’

`Softening’

A recent study by the Chicago Federal Reserve Bank says the surge in the U.S. housing market since 2001 is linked to gains in wealth and the introduction of innovative mortgages and has little to do with speculative fever that characterizes bubbles.

“We currently are seeing a good deal of softening in housing markets, and home prices are increasing at a slower rate,'’ Moskow said yesterday in prepared remarks to the McLean County Chamber of Commerce in central Illinois. “Even if prices did decline nationally, history suggests that the impact on consumer spending would be modest and gradual.'’

Not all economists agree with such a sanguine outlook. The slump in housing has raised the chances the economy will fall into recession next year to at least 40 percent, according to David Rosenberg, chief North American economist at Merrill Lynch & Co. in New York.

Economists at Merrill Lynch estimate housing contributed 2 percentage points to growth, or about 60 percent, over the last 3 years. The wealth effect from rising home prices boosted consumer spending along with the contribution from construction and housing-related employment gains, they said on Aug. 18.

Existing home sales in US at two-year low

Sales of previously owned homes in the United States fell more than expected in July, resulting in the biggest supply of unsold homes in more than a decade, as higher mortgage rates discouraged would-be home buyers.
Purchases declined 4.1 percent last month to an annual rate of 6.33 million, the lowest since January 2004, from 6.6 million in June, the National Association of Realtors said Wednesday. Sales fell 11.2 percent compared with a year earlier.

Rising mortgage rates, following a surge in prices during the five-year housing boom, have made home purchases less affordable than at any time in almost two decades, according to the realtors’ group. The Federal Reserve, which this month paused after two years of interest rate increases, is counting on an orderly contraction in housing to help slow growth.

The number of unsold homes on the market at the end of July represented 7.3 months’ worth at the current sales pace, the highest since 1993.

The median price of an existing home rose 0.9 percent in July from a year ago to US$230,000 (HK$1.79 million), the realtors’ group said.

The supply of homes for sale increased 3.2 percent to 3.86 million in July, taking the inventories up from the 6.8 months’ worth at the end of June.

Sales of previously owned homes rose in just two of the prior 12 months through June. They averaged 7.05 million last year. Existing home sales account for about 85 percent of the housing market and are recorded when a contract is closed.

The focus now shifts to new home sales, a more timely indicator because transactions are counted when a contract is signed. A report from the Commerce Department tonight will probably show new home sales declined to an annual rate of 1.1 million in July from 1.131 million in June, the median estimate of economists in a Bloomberg survey shows.

The National Association of Home Builders/Wells Fargo’s index of builder confidence plunged this month to the lowest level in 15 years, a report said last week.

Toll Brothers, the largest US builder of luxury homes, said net income in the three months ended July 31 fell 19 percent, the first drop in four years.

The builder cut its fourth-quarter profit forecast as rising interest rates hurt demand for its houses, which sell for as much as US$1.5 million.

The 16-member Standard & Poor’s Supercomposite Homebuilding Index, which includes Toll Brothers, has dropped 36 percent since the beginning of the year.

Resales of single-family homes fell 5 percent last month to an annual rate of 5.51 million, the report said. Sales of condos and co-ops rose 2.8 percent to an 818,000 rate. Purchases fell in all regions of the country.

“We’re more likely nationally to see a soft landing rather than a bubble bursting,” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts.

Meanwhile, mortgage applications rose for a third straight week as homeowners took advantage of falling interest rates to refinance loans, data from the industry’s main trade group said Wednesday.

The Mortgage Bankers Association in a statement said its seasonally adjusted index of mortgage application activity for the week ended August 18 edged higher by 0.1 percent to 561.5 from the previous week’s 561.2.

Borrowing costs on 30-year fixed- rate mortgages last week tumbled to an average 6.38 percent from 6.54 percent in the previous week. The rate compares with the four-year high of 6.86 percent, touched in mid-June, the MBA said. BLOOMBERG, REUTERS

Housing sales plunge to `04 level

NEW YORK, NY, United States (UPI) — Sales of existing homes plunged 4.1 percent in July to their lowest level since January 2004, the National Association of Realtors says.

The report, showing a continued weakening in the housing market, displayed a seasonally adjusted annualized rate of 6.33 million, the Wall Street Journal said. Economists in a recent MarketWatch survey indicated they expected a decline to 6.56 million.

Sales were down in all four regions. The median sales price rose 0.9 percent in the past year to $230,000. It matches June for the weakest price growth in 11 years.

David Lereah, chief economist for the realtors group, described the housing market and the economy as ‘fragile’ and warned that ‘boom markets are cooling significantly.’

Real Estate Troubles Build

By Nicholas Yulico

Existing-home sales fell a steeper-than-expected 4.1% in July as the inventory of houses on the market hit a record high, signaling further trouble for homebuilders trying to sell new homes.
The National Association of Realtors said Wednesday that total existing home sales came in at a seasonally adjusted annual rate of 6.33 million for July, the lowest sales in two years. The number was below the downwardly revised pace of 6.6 million in June, and 11.2% below the 7.13 million mark in July 2005.

Economists surveyed by Reuters expected an annual sales rate of 6.55 million homes for July.

The national median existing-home price for all housing types was $230,000 in July, up 0.9% from a year earlier. The median is a typical market price where half of the homes sold for more and half sold for less

The inventory of homes for sale spiked to a whopping 3.86 million units, which represents a 7.3-month supply at the current sales pace.

“Inventories were up almost 40% higher from year-ago levels, and this is an environment of slowing sales,” says Phillip Neuhart, an economic analyst with Wachovia.

Wachovia predicts a 20% decline in sales through the end of 2007 as compared to the end of 2005.

There’s no reason we can’t go back to the pre-boom levels (of 2003),” when annual sales totaled less than 6 million, Neuhart says.
From June to July, sales declined across the country. Sales fell 6.4% in the West, 5.9% in the Midwest, 5.4% in the Northeast and 1.2% in the South.

The sales numbers are a lagging indicator of the housing market since the data is based on home closings, which trail contracts by about two months.

Still, the high inventory of homes for sale spells trouble for homebuilders, who continue to report declining orders. On Tuesday, Toll Brothers (TOL - commentary - Cramer’s Take) provided optimistic order projections for next year, which assumes that trends will eventually improve.

Builder stocks were lower Wednesday, with Centex (CTX - commentary - Cramer’s Take) dropping 3.1%, Toll falling 2.9% and Lennar (LEN - commentary - Cramer’s Take) shedding 2.4%.

KB Home (KBH - commentary - Cramer’s Take) was down more than 5% after The Wall Street Journal reported that the company is looking into its stock option grants to CEO Bruce Karatz.

By EDWARD WYATT; Louis Uchitelle contributed reporting from Washington for this article. 03/08/2006
The New York Times
Copyright 2006 The New York Times Company. All Rights Reserved.

Alan Greenspan, the former chairman of the Federal Reserve, has agreed to sell his memoir for an advance of more than $8.5 million, according to people involved in the negotiations, making a deal that appears to give him the second-largest advance ever paid for a nonfiction book.

The book is scheduled to be published in the fall of 2007 by Penguin Press, an imprint of the Penguin Group USA, which is part of Pearson. Ann Godoff, the president and publisher of Penguin Press, said yesterday that the book would present Mr. Greenspan’s view of the world during his tumultuous 18-year tenure at the Federal Reserve and his vision for the future.

Mr. Greenspan, who turned 80 this week, served as Fed chairman from shortly before the October 1987 stock market crash through the end of January. He said yesterday that he had already begun work on the book, which he expects to finish by the end of the year.

‘’Until the book is significantly complete, I do not plan to engage in significant consulting,'’ he said. ‘’I plan to speak periodically until the book is much closer to completion.'’ Though a ghostwriter will collaborate with him, Mr. Greenspan said, ‘’I plan to do the first draft and the last draft.'’

Given that Mr. Greenspan’s notoriously opaque statements as Federal Reserve chairman sometimes confused even the closest observers of monetary policy, it remains to be seen whether he can write a book that appeals to a large general-interest audience.

He will need to do so, however, to justify the advance that Penguin offered, outbidding several other large publishers, including HarperCollins and Random House. Assuming a cover price of about $30, the publisher — which receives about half the price of each book sold — would have to sell nearly 600,000 copies of the book to recover the cost of the advance, and Mr. Greenspan would not receive any additional royalties until the book sells nearly 1.9 million copies.

Penguin bought the world rights to the book, meaning that it could recoup some of its costs by selling the right to publish translated editions of the book in foreign countries.

Ms. Godoff said she was confident that Mr. Greenspan’s book would appeal to an audience far beyond those in the financial world.

‘’I think his life and his career are different from any business luminary you can mention,'’ Ms. Godoff said. ‘’His experience over the last 50 years in international relations, his knowledge of the way the world works in general, and his relationships with everybody important in the world cannot be matched by anyone.'’

Mr. Greenspan’s advance ranks second only to the more than $10 million paid to former President Bill Clinton for his memoir, ‘’My Life,'’ which was published in June 2004. Pope John Paul II received an advance of $8.5 million in 1994 for his book, ‘’Crossing the Threshold of Hope,'’ and Senator Hillary Rodham Clinton received an $8 million advance for her memoir, ‘’Living History,'’ published in 2003.

The New York Post disclosed the Greenspan book deal on Tuesday.

Ms. Godoff and Mr. Greenspan declined to comment on the amount of his advance. Her three-year-old imprint has published such recent nonfiction best sellers as ‘’Ghost Soldiers'’ by Steve Coll, which won the Pulitzer prize for general nonfiction last year; ‘’Alexander Hamilton'’ by Ron Chernow and ‘’The City of Falling Angels'’ by John Berendt.

In her long publishing career, Ms. Godoff has won a reputation for paying steep advances to authors and thereby making risky bets that only sometimes paid off. In January 2003, she was fired as the president of the Random House Trade Group, for failing to meet profit targets.

Robert B. Barnett, the lawyer who represented Mr. Greenspan in the book negotiations, also declined to comment on the amount of the advance. He said Mr. Greenspan was talking with several potential ghostwriters but had not settled on one yet.

The leading candidate for that position, David Wessel, the deputy Washington bureau chief for The Wall Street Journal, said last month that he had talked with Mr. Greenspan about helping him with the book. ‘’While this has been under discussion,'’ Mr. Wessel said, ‘’I've recused myself from editing stories about Greenspan in The Journal.'’

Mr. Greenspan, in the 10-page proposal for the book that his representatives circulated among publishing houses, said that he would write about the presidents and other politicians he has dealt with and would discuss a range of issues, from China’s effect on the global economy to how 9/11 affected his understanding of economic trends.

‘’I do not intend to dwell on personality aberrations, except as they affect policy decision-making — which, of course, always involves personalities,'’ he wrote, according to a copy of the proposal obtained by DealBook, a Web log published by nytimes.com. ‘’I will also describe what it’s like to be a prop at a Congressional hearing, which is too often the role of witnesses.'’

Mr. Barnett said that readers would be surprised at how approachable Mr. Greenspan is in the book. ‘’The person that we watched testifying and speaking ‘Fed-speak’ is not Alan Greenspan,'’ Mr. Barnett said. ‘’Alan Greenspan is articulate, insightful and also funny. The proposal that he circulated reflected that, and the publishers he met with saw that. This book will be a highly readable piece of work.'’

Susan Petersen Kennedy, the president of the Penguin Group USA, echoed that sentiment. ‘’What I’m looking for here,'’ she said, ‘’is a book that will sell for the next 40 years.'’

Photo: Alan Greenspan, the author, is expected to get more than $8.5 million. (Photo by Doug Mills/The New York Times)(pg. C1)

Chart: ‘’Printing Money'’

Alan Greenspan’s advance for his memoirs is one of the largest paid to a nonfiction author in recent years. Here is how it stacks up.

Bill Clinton
DEAL STRUCK: 2001
PUBLISHER: Alfred A. Knopf
TITLE: My Life
REPORTED AMOUNT, MILLIONS: $10.0

Alan Greenspan
DEAL STRUCK: 2006
PUBLISHER: Penguin
TITLE: Untitled
REPORTED AMOUNT, MILLIONS: 8.5+

Pope John Paul II
DEAL STRUCK: 1994
PUBLISHER: Alfred A. Knopf
TITLE: Crossing the Threshold of Hope
REPORTED AMOUNT, MILLIONS: 8.5

Ronald Reagan
DEAL STRUCK: 1989
PUBLISHER: Simon & Schuster
TITLE: An American Life
REPORTED AMOUNT, MILLIONS: 8.5

Hillary Clinton
DEAL STRUCK: 2000
PUBLISHER: Simon & Schuster
TITLE: Living History
REPORTED AMOUNT, MILLIONS: 8.0

John F. Welch Jr.
DEAL STRUCK: 2000
PUBLISHER: Warner Books
TITLE: Straight From the Gut
REPORTED AMOUNT, MILLIONS: 7.1

Robert E. Rubin
DEAL STRUCK: 2000
PUBLISHER: Random House
TITLE: In an Uncertain World
REPORTED AMOUNT, MILLIONS: 3.3

Rudolph Giuliani
DEAL STRUCK: 2001
PUBLISHER: Miramax Books
TITLE: Leadership
REPORTED AMOUNT, MILLIONS: 3.0

Nancy Reagan
DEAL STRUCK: 1989
PUBLISHER: Random House
TITLE: My Turn
REPORTED AMOUNT, MILLIONS: 2.0
(pg. C8)

By Jeffrey A. Trachtenberg 03/08/2006
The Wall Street Journal
(Copyright (c) 2006, Dow Jones & Company, Inc.)

Alan Greenspan, the former chairman of the Federal Reserve, sold his memoirs to Pearson PLC’s Penguin Press imprint for more than $8 million, according to those familiar with the situation. The book is expected to be published in fall 2007.

“We think he is going to write a book that will live for a long time,” said Susan Petersen Kennedy, president of Penguin Group (USA). “He lived through an amazing part of history, and he was never able to speak out. He had to be very careful because of his position.”

Mr. Greenspan also will look to the future. “He’s going to offer American readers a look at the economic situation, the political situation and the global economy,” Ms. Kennedy said. “He has a complete world view.”

Mr. Greenspan’s pronouncements before Congress were closely watched and often eloquent, but they were also deliberately abstract, even opaque. Even so, Ann Godoff, publisher of Penguin Press, thinks the broad public will want to read the book.

“He wants to write a general-interest book that will last for many generations,” said Ms. Godoff. “He is loaded with anecdotes and goes from one to the next.”

The advance is one of the biggest in the history of U.S. publishing, but because it includes world-wide rights, it will be partly offset by sales to foreign publishers.

Mr. Greenspan’s memoir will be edited by Scott Moyers, the editor in chief of Penguin Press. It isn’t clear if Mr. Greenspan will work with an outside writer, though Ms. Godoff said Mr. Greenspan told her he intends to write the first and final drafts.

Robert Barnett, the Washington-based attorney who represented Mr. Greenspan, said more than a dozen publishers participated in the four-day auction.

Mr. Barnett also represented the Clintons in their recent book projects.

Former President Clinton’s memoir, “My Life,” received an advance estimated at $10 million or more from Bertelsmann AG’s Alfred A. Knopf imprint, while CBS Corp.’s Simon & Schuster paid an $8 million advance for Sen. Hillary Rodham Clinton’s memoir “Living History.”

Press reports in 1994 stated that Pope John Paul II received an advance of $6 million to $7 million for “Crossing the Threshold of Hope,” published that year by Knopf.