FocusShares Trust is going to close up four of their funds as of Oct. 20, 2008. Their last day of trading will be on Oct. 17.

This brings the total number of closings in 2008 to 40.

Blame a lack of traction in the market, says Eric Rosenbaum for Index Universe. Don’t count FocusShares out just yet, though. Though calls weren’t returned, there are several ETFs currently in the pipeline and in various stages of registration with the Securities and Exchange Commission (SEC).

There’s a first-mover advantage when it comes to ETFs. Pair that up with a troubled economy, and assets just aren’t flowing into ETFs as they normally would be. When the markets turn around again, though, investors will be back.

The following ETFs are going to be dissolved:

• FocusShares ISE Homebuilders Index (SAW)
• FocusShares ISE SINdex Fund (PUF)
• FocusShares ISE-CCM Homeland Security Index Fund (MYP)
• FocusShares ISE-Revere Wal-Mart Supplier Index Fund (WSI)

The four funds had gathered a total of $17 million in assets at the end of September, and had net outflows year-to-date of $5 million.

The total number of exchange traded products stands at 813.

KB Home (KBH) is one of the nation’s largest homebuilders, and it’s not immune from the troubles: its third-quarter loss quadrupled from one year ago. Revenue plummeted by 56%, reports Alex Veiga for the Associated Press.

Unsurprisingly, the rough conditions for KB Home and other homebuilders is exacerbated by lower demand for new homes. Sales are at their slowest pace in 17 years. Half of the company’s homebuyers backed out of their contracts during the quarter. Falling home values don’t seem likely to improve anytime soon, either.

The company’s CEO also blamed rising foreclosures and increasingly tight lending standards.

Lennar Corp. (LEN) has narrowed its third-quarter loss, but the company’s revenue fell by more than 50%.

Interestingly, homebuilding ETFs appear to have been resilient for much of this year:

• iShares Dow Jones US Home Construction (ITB): up 6.3% year-to-date; KB is 5.2%; Lennar is 5.5%
• SPDR Homebuilders (XHB): up 7.3% year-to-date
• FocusShares ISE Homebuilders (SAW): up 3.4% year-to-date

As of August, the United States suffered a record drop in the price of existing homes as the sales pace slowed and the overstock of homes got smaller, reports Burton Frierson for Reuters. The drop in home prices fell by a record 9.5%, as well.

In better news, the number of homes for sale declined by 7%. But as many as 2 in 5 homes are by borrowers who have seen their property lose value or are facing foreclosure.

The next challenge on the home front is the tight lending standards. If lending gets so tight, sales will be hurt even further.

Focused ETFs:

• iShares Dow Jones US Home Construction (ITB), down 2.4% year-to-date
• SPDR Homebuilders (XHB), down 0.7% year-to-date

Foreclosures in the United States shot up 55% in July from a year ago, says Alan Zibel for the Associated Press. It was also an increase of 8% from June.

Even though the government intervened to help stem the housing crisis, it’s predicted that nearly 2.8 million homes will either face foreclosure, turn their homes over to lenders or sell the properties below the mortgage value by the end of 2009.

Meanwhile, home prices are continuing their slide. In the last year, the cost of a home has gone down 7.6%, Les Christie for CNN Money reports. The aforementioned foreclosures are helping drive down the numbers. Some areas have seen double-digit year-over-year losses: Sacramento, Calif., homes have sunk 35.6%; Los Angeles homes have lost 29.6%; Las Vegas home prices have fallen 23.6%.

Prices are still going up in other areas, though, sending inflation up at its fastest rate in 17 years, reports Martin Crutsinger for the Associated Press. The 0.8% increase was twice what had been expected. It’s the third consecutive month of big inflation jumps.

Relief from high energy prices seems to be on the way. Gas hit $4.11 a gallon in July, but has since fallen to $3.79. Oil is down $30 a barrel from its July peak.

ETFs trading higher today include:

• SPDR S&P Homebuilders (XHB), down 3.5% year-to-date
• iShares Dow Jones U.S. Home Construction (ITB), down 11.8% year-to-date
• FocusShares ISE Homebuilders Index Fund (SAW), down 13.1% year-to-date
• DJ Wilshire REIT (RWR), up 1.7% year-to-date
• iShares Dow Jones U.S. Real Estate (IYR), down 1.3% year-to-date

Meritage is the 12th-largest homebuilder in the United States.

If the numbers aren’t up to par, it’s just the latest in a long list of bad news for the housing industry. Home sales and prices are falling, with the Commerce Department reporting a 0.6% drop in new single-family home sales in June, reports Alex Veiga for the Associated Press. Sales are now 33% below where they were one year ago, and prices are off 2%.

Centex Corp. is also expected to report a quarterly loss tomorrow, while Pulte Homes announced a loss earlier last week.

The homebuilders ETFs are all trading sharply lower this morning, including:

• FocusShares ISE Homebuilders Index Fund (SAW): down 15.4% year-to-date; MTH is 4.8%; Centex is 6.2%; Pulte is 5%
• iShares Dow Jones U.S. Home Construction (ITB): down 13.4% year-to-date; MTH is 6%; Pulte is 6.2%
• SPDR Homebuilders (XHB): down 11.8% year-to-date; MTH is 4.7%