555,000 New Homes For Sale In May, 2006
The new home sales numbers are out. “Sales of new one-family houses in May 2006 were at a seasonally adjusted annual rate of 1,234,000, according to estimates. This is 5.9 percent below the May 2005 estimate of 1,311,000. The median sales price of new houses sold in May 2006 was $235,300. The seasonally adjusted estimate of new houses for sale at the end of May was 556,000.”
The $235,300 median is down from the high in February 2006 of $250,800. The inventory looks like another record:
448,000 May 2005
458,000 June
459,000 July
477,000 Aug.
491,000 Sept.
492,000 Oct.
508,000 Nov.
515,000 Dec.
525,000 Jan. 2006
533,000 Feb.
547,000 Mar.
553,000 April
555,000 May
“The median price of homes sold did decline to $235,300, a drop of 4.3 percent from the April sales price. Economists believe that the huge backlog of unsold homes will put further downward pressure on prices in coming months.”
And Lennar had this out today. “Stuart Miller, CEO of Lennar Corporation said, ‘After a long period of steady growth, the homebuilding industry has slowed, as evidenced by lower new orders and higher cancellation rates in many geographic markets across the country. These conditions are primarily the result of speculators exiting the market and changing homebuyer sentiment.’”
“The company warned the second half of the year would be hurt by slower new orders and higher cancellation rates. Lennar lowered its full-year earnings guidance. The company’s gross margin percentage on home sales fell 1.4 percent in the quarter, due to higher sales incentives that caused declines in the Central and West regions.”
“Lennar plans to cut land costs, production costs and selling, general and administrative expenses to try to partially offset the increased incentives, Miller said in a statement.”
“In a note to investors following the earnings announcement, Margaret Whelan, an analyst at UBS, reduced her earnings estimates for the company for both 2006 and 2007. Whelan said that while the small decline in orders Lennar reported was ‘impressive,’ she believes the company is ‘discounting more heavily than peers.. which will negatively impact future margins.’”
hmmm..
‘The increase in sales in May pushed the number of unsold new homes left on the market at the end of the month down slightly to 556,000 units, down slightly from the all-time high of 560,000 homes for sale at the end of May.’
HB stocks are way up today. Centex is up over $2 so far. I am thinking of buying some more puts to celebrate!
Don’t. See my comment above. This is what I do for a living.
You’ll get a better entry down the line.
This short squeeze in the homebuilder stocks will go on awhile IMO. I hate that group as much as the rest of you but don’t be too quick to short or buy puts. There will be plenty of time and better prices for that.
The short interest in the builders and lenders is huge right now. That means the difference between “should” and “is” is probably the most volatile it has ever been right now.
The big thing I see missing from the data is I don’t believe cancelations are subtracted from the numbers. Accordinlgy, a lot of these “New Sales” are just reselling past cancellations. At a lower price I’m sure.
Anybody know otherwise?
That will matter when it matters. Right now, today’s business is short hunting. Add the Fed in this week and let’s just say, I would rather be long than short this group right now.
It is a good thing you are long; and we will assume that your bullish take on the sector has nothing whatsoever to do with that fact…
It’s a trade. I think the group is trash but my job is to make money and that was an easy one. I am not bullish on the group but that doesn’t mean you can’t make money short term being long when sentiment swings too hard the opposite way.
Maximum frustration. Never forget that. This RE/housing market is too entrenched in the national psyche to simply crash like the stock market did. It is also too illiquid to have rapid price discovery. You know that. These priciples will serve you well down the line when it’s tempting to jump in and buy too soon.
I follow short interest , put/call ratios, and other parameters at the Schaeffer site. With the exception of WCI, which has moderately high short interest, the short interest on the home builders is low and has been low for some time. LEND has moderately high short intest and CORS has fairly high short interest. This is not so say that the home builder stocks might benefit a little from short covering, but talk of a real squeeze seems misguided to me.
Where are you getting data showing high short interest for home builders? Which ones?
I traded this off sentiment, not hard data on short interest. Any short trader (not an investors with a short and hold strategy which involves whipsaws each way) with a brain covered or hedged a week to ten days ago at least for the short term when the Fed monkeys were mouthing off on a daily basis. I don’t know what more anyone could want. Right now, IMO only, there is no edge shorting these stocks. I don’t look for an epic squeeze but a tradeable one on these newer (and probably retail) shorts.
That’s all.
Today’s opening rally in the builder stocks is quickly beginning to look like it was just a selling opportunity…
http://tinyurl.com/o7skt
personally, I don’t ‘hate’ homebuilders. I have been critical of the public HB execs, who were pushing this ‘land shortage’ line. I also point out that overbuilding will hurt a lot of folks that haven’t done anything. Then there are those CEO’s that got a lot of press with the the ‘new housing paradim’ last year, suggesting Americans are going to live with their parents into their 40’s to save downpayments, etc.
I hate ‘em. They tear up land, steal from buyers, underpay their illegal employees and rape their shareholders while enriching themselves.
the buyers and shareholders are all willing participants, nobody put a gun to their heads.
and the employees seem to think the jobs are worth keeping.
Well, as we all know, sometimes people have to be protected from themselves. This RE market is a prime example, wouldn’t you say?
Protecting people from themselves assumes you know better than them.
I don’t presume to think I’m that smart.
I do think this requires protection from other people (fraud), as do many things… but protecting someone from themselves is not something I have time for.
It’s everything I can do to protect me from myself.
So does that mean you are willing to turn the Social Security accounts over to people to manage themselves?
Why one cannot hate willing participants?
401Ks are just as bad. I was astonished at the choices I was given.
If we don’t want our senior citizens to starve, that’s fine — call it welfare — I’m more than happy to do it. But if it is truly investing for the future, then yes, I think people should direct their own accounts.
Ok, fine, but I’m not paying into that system.
It’s called freedom. Some Americans still believe in it. (admitedly, it seems like fewer all the time.)
You may be right. The easy short money was made in April and May. Even though the fundamentals are worse for the HBs right now — and will stay bad for quite a while — they were due for a technical correction. The herd mentality works in both directions.
Even knowing this, I just couldn’t bring myself to go long these stocks. I’ll just wait until they are ripe for the next leg down.
The Trend is Your Friend…If you believe what is being reported on Ben’s Blog, buy every put option you can on these upswing days.
These puts are acting just like the real estate numbers.. The number of houses for sale are up and the median price is up. Unless they repealed the laws of physics, this doesn’t make any more sense then homebuilders stocks going up with all the bad news. The 4 HB options are follow are TOL, DHI, PHM, RYL and I am a buyer on Jan 2008.
These are actually quite bearish numbers; especially if the Existing Home Sales numbers reported tomorrow are down with inventory up again. Increased volume on declining prices sounds to me like the builders are using their pricing power to grab market share.
What’s killing me is that the number of sales is up 4.6%, the average price is down by almost exactly the same amount, meaning total dollars is just about exactly the same, yet the HB’s are up almost five percent. Damn.
You’re confusing the business with the stock.
Two different things.
Let us not forget the huge amount of incentives that the home builders are offering. This certainly has helped to keep numbers up.
David
http://bubblemeter.blogspot.com
Let’s also not forget that the price declines reported by the builders likely neglect to factor in the cost of incentives. Put another way, if you adjusted the recent price to factor in the effect of giving away free cars or other incentives valued at maybe $50-$100K, you would see larger price declines than what are officially reported.
Can anyone confirm whether the median price figures are adjusted for the value of incentives?
Right, what would the number bee if the $100,000 incentives were stripped away. Also, don’t all these cancellations we hear about disappear from the inventory count?
If a $100,000 incentive is given on a new $500,000 house, doesn’t that imply a 20% reduction that doesn’t show up in the median but is still part of the assessment that the FB pays taxes on?
From the Bloomberg article:
“Sales increased 4.6 percent to an annual rate of 1.234 million from a pace of 1.180 million in April that was lower than previously reported”
Looks like the spinmeisters are at it again. Make each month look stronger than expected by counting all contracts (regardless of cancellation rate) and then revise the month’s numbers downward later in the month when no one is looking to make the next month look strong again. Wash, rinse, repeat.
Another thought; these numbers aren’t exactly going to force Mr Bernanke to stop raising interest rates.
That is the beauty of industry attempts to suppress evidence of the slowdown underway — the less evidence of the slowdown that appears in the mainstream financial media, the more justification the Fed has to make sure that inflation does not get out of control, without having to worry about slowing down the economy by too much.
Nifty. I think there’s an expression or term for that, but I can’t remember it. Perhaps similar to painted into a corner.
“Shooting yourself in the foot…”
Catch 22
Damned if you do, damned if you don’t!
“Hoist by his own petard”
Yep, keep raising those rates BB…someone has to clean up the mess left behind by bubble man.
May Year-Over-Year Sales
United States -5.9%
Northeast -36.3%
Midwest -20.8%
South 8.4%
grim
Northern NJ Real Estate Bubble
West -12.7%
“The median price of homes sold did decline to $235,300, a drop of 4.3 percent from the April sales price. Economists believe that the huge backlog of unsold homes will put further downward pressure on prices in coming months.”
What was the good news that encouraged investers to bounce up the HB stock prices? The one month median drop of 4.3% in the sales price of new homes represents a 41% annualized rate of price decline, portending lower future builder profits, as reinforced by guidance from the companies themselves. Do lower profit forecasts normally result in a stock rally?
They do when there are too many shorts and the stocks have been trashed like these have. This was actually a pretty intuitive trade although painful for a few days. The newer shorts are low hanging fruit for these guys.
I am a firm believer in the “silly season”. The silly season lasts from May1 to Nov 1. I never invest in Stocks during this period. The reason is that if you invested during those months since 1950 the average annual rate of return is ~2% as opposed to investing from Nov 1 to April 30 where the average annual rate of return is ~25%.
See chartoftheday.com
The adage from the floor was “Sell in May , Go away”
things will not go straight down..which is as it should be. Buying puts now is more attractive OTHO.Dec06(tol) is 2.25. Bought 1000.
Interesting. Been a while since I did options regularly. Appears rather undervalued. Good luck on the trade.
OT, but kind of interesting. From the LA Times.
California, Here They (Still) Come
http://tinyurl.com/ku3j9
The LA Times really is beyond reproach when they write hogwash like this. Inventories are balooning into the stratosphere, home unit sales are down, prices are actually falling, and according to the census bureau California is experiencing documented out migration. And yet they write this fluff piece trying to confirm a California RE talking point “everybody wants to live here.” Unbelievable!
I did not see any numbers provided on how many are migrating out, in the article.
It’s a spin piece.
BTW, the last two years, Los angeles has weather and sunshine more like Seattle, very few sunny days.
Just so you know the other side of this trade. This is the midset. It’s wrong but it will take time to be proven wrong. In the meantime, keep your powder dry.
Housing Disappoints Bears
By Tony Crescenzi
RealMoney.com Contributor
6/26/2006 10:46 AM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10293709.html
Many a bear is depending on weakness in the housing market to upend the indefatigable U.S. consumer, but there hasn’t yet been any evidence to support their case. While there’s no doubt that the housing market isn’t as hot as it once was, sales activity remains elevated compared to past years and the decline seen thus far in home prices has been small relative to recent gains.
New home sales ran at an annualized pace of 1.234 million in May, about 89,000 more than expected. Sales are down about 10% from the peak of 1.367 million set last July, but they’re about 50% higher than five years ago and about 70% higher than the average sales pace in the 1990s.
The recent decline in home prices may be boosting sales of late. The median price of a new home was $235,000 in May, a decrease of $10,000 from the previous month and about 5% from the peak. The average price fell $8,000 in May and these prices are also down about 5% from the peak. These declines are small considering that prices have gained around 50% since 2000.
The bear camp expects a decline in home prices to result in decreases in household net worth, a condition that in past years has compelled households to boost their savings rate, resulting in a weakening of consumer spending. This condition is not yet in place
“The bear camp expects a decline in home prices to result in decreases in household net worth, a condition that in past years has compelled households to boost their savings rate, resulting in a weakening of consumer spending.”
Just a matter of time, IMHO.
Also, as we have already noted above, Mr. Crescenzi does not think deeply enough about the role of incentives in distorting the official drop in new home prices; the actual drop in value is much larger than 5% off the peak, but incentives are used (in part) to hide the ugly truth.
The actual drop in like houses is probably smaller than the 4% figure because of the regional trends. More houses are selling in the South where houses are cheap and less are selling in the Northeast and West. This trend in where houses are selling distorts the median and average sale price stats.
There hasn’t been a bubble in the South. The Northeast has the slowest sales this last May than in any of the last 12 months. This makes it obvious that the bubble markets of the northeast are failing. The housing markets might be regional afterall.
“There hasn’t been a bubble in the South.”
Absolutely not — there has especially been no bubble in Florida (or is Florida outside of what you refer to by “the South”?).
There hasn’t been a huge runup in prices in most markets in the south. There are exceptions and I agree that parts of Florida are in a speculative mania. We do not see the same speculative mania in Georgia, South Carolina, Tennessee, Texas, Louisiana (except New Orleans), Alabama, or Mississippi. If cheap markets in the south are an increasing % of total houses sold then it will bring the average price down.
Major metro areas all over the sunbelt are leading growth, so it is hard to see how they could avoid some level of bubbling. Certainly Texas is up to its usual equity spunge act, then there is the issue of New Orleans and all that gulf coast action. The situation there is nothing like San Francisco, obviously, but I still call bubble–even in Arkansas.
Perhaps the huge losses in real estate values due to Katrina were averaged against runups, that give a fals appearance
I dunno, 5000 sqft McMansions were asking $700K near my Dad’s place north of Atlanta. This while their next door neighbors were having difficulty selling their 3000+ sqft house for $330K… and they are literally on a lake. Something is fishy in Atlanta, but I don’t know the market well enough to call it.
Oh yeah and my not-particularly-bright step-sister who bought a house in Atlanta in 2004 cash-out-refied to redo the kitchen and bathroom.
How about this line from MarketWatch this morning:
The government cautions that its housing data are subject to large sampling and other statistical errors. It can take up to six months for a trend in sales to emerge. New-home sales have averaged 1.17 million per month over the past six months, unchanged from the six-month period ending in April.
The standard error is so high, in fact, that the government cannot be sure sales increased at all in May. The 4.6% increase is statistically meaningless.
Our local morning news said that the number of new homes INCREASED. What gives?
This is the mad rush to the exits by the homebuilders… they will pull out every trick in the book (and they have quite a few) in order to unload their inventory.
They will be successful… for a bit.
Not reported: Record number of resale houses NOT sold.
The homebuilders (new homes) are cannibalizing the sales for the resale market.
That’s what happened last month I believe. New Home Sales were way up, the next day Existing Home Sales were way down. Quite a whipsaw stock-wise. Might be a replay tomorrow.
Wow! Whip-saw used twice on a thread. My head is spinning! (as a direct result of the whip-saw, or whipsaw effect - going to Google or Wikipedia for the origin now.)
although new home sales may be up in the west, resales through the MLS in Orange County, CA are down between 35% to 40% compared to last year and previous years.
Hey, how do you know? OC Register, for the first time I can remember, does not have OC DataQuick info in Sunday edition. That’s how press will deal I suppose…
Go directly to DataQuick for the OC numbers:
http://www.dqnews.com/ZIPOCR.shtm
More commentary
Richard Suttmeier
Update On Lennar
6/26/2006 11:48 AM EDT
New Home Sales may have been stronger than expected, but this series can be off by more than 10%, and does not account for cancellations. Instead, look at Lennar’s (LEN:NYSE) cautious outlook. The company expects challenges in the second half with lower new home orders and higher cancellation rates.
Is this bad news built in? LEN is rated a buy according to ValuEngine with fair value at $59.87. With the company lowering full year guidance, fair value is likely to decline as Wall Street analysts lower their 12-month forward EPS estimates. The stock is trading above my annual value level at $43.51 after testing that key level on June 13. My annual pivot at $59.87 is the risky level for the second half of the year.
The PHLX Residential Housing Sector Index (HGX) is above its 200-week simple moving average at 195.42.
Lennar held its value level. HGX is above its key level. It appears that the bad news is built into the homebuilders
Lennar held its value level. HGX is above its key level. It appears that the bad news is built into the homebuilders
______________________________________
LOL!
I go by what I see more than what I read. Travelling around Florida what I see is a lot of available homes for sale. Just as during the peak of the frenzy the market would visably change from one month to another, it is doing the same now, except to the downside. More and more homes hitting the market.
You’re right…it’s the cumulative effect of the changes beginning to surface that will be reflected in the data 3-6 mos. from now - IMHO. These things take time, but there is no denying a major shift is on the horizon.
Just hit Boston.com:
“Home sales, prices fall in May”
http://www.boston.com/business/ticker/2006/06/home_sales_pric_2.html
-and-
“Home foreclosures double in May”
http://www.boston.com/business/ticker/2006/06/home_foreclosur.html
“We expected foreclosure rates to increase again this year, but the levels we are tracking outdistance our earlier predictions,” Shapiro said. “We may be witnessing a ‘perfect storm’ scenario where a flat real estate market, higher interest rates, rising energy costs and specialty loans are causing significant difficulty for thousands of Massachusetts property owners,” he said.
__________________________________________________________
PERFECT STORM . . . great analogy from Boston. This is what many on this blog have been predicting, and MSM is starting to identify and print.
Nominal vs. real YoY prices:
median average
May 2005 $228,300 $289,400
May 2006 $235,400 $294,300
+3% +2%
Inflation is currently running at 4.2% YoY, so that means in real terms, prices are now down YoY.
I’m surprised nobody on this thread has already pointed this out.
4.2% headline inflation includes energy prices. Core inflation is down to 2.0%
That’s right, nobody buys gas or food.
Really! Month over month, the core means something. YoY, as far as I’m concerned, it’s meaningless.
They are volatile! Didn’t you know?
I’m not buying either… I’m just waiting until their volatility takes the price back down. Uh-huh.
“4.2% headline inflation includes energy prices. Core inflation is down to 2.0% ”
We can safely use core numbers instead of overall inflation, because energy isn’t that important to Americans.
whew… good thing americans don’t actually have to pay for gas. that might actually crimp their lifestyle and wonton homebuying habits
As opposed to Pad Thai buying habits?
Sorry, couldn’t resist.
Sorry but EVERYTHING I buy anymore is over 2% higher excluding some technology items. Food, toliet paper, cosmetics, health care items, etc. And while manufacturers have been trying to avoid passing increased energy costs on to consumers they simply cannot anymore. I have a client who manufactures toys and says their prices are going up 30% this year because they simply can’t subsidize the energy costs anymore. If you put shoes and computers together maybe you get 2%. But for the basic staples it’s a lot higher.
RIght on - my corner shishkebob guy (in NYC) just raised his prices 50 cents across the board - 1st time in 5 years - because he has to pay so much more for his propane tanks & supplies. Same for my coffee guy & every other vendor I know of.
I posted about 8 months ago wondering when we would see the effects of “trickle-down inflation (not wealth), especially due to the rapid increase in energy costs.
Took a lot longer than I thought, but it is finally a reality. We all feel it, and will for years to come.
Wondering how much the lag is for interest rate increases to “trickle down.”
Like Art Laffer as a person, but don’t necessarily respect him as a real economist.
Six to eight months seems to be what is now occuring, IMHO.
Hey! Someone needs to start tracking their estimated/revised figures month-to-month. I believe we have a pretty good record from this blog. Note that the new April sales figure given (1.18m) was revised downward from the original estimate of 1.198m. Check out Robert Cote’s excellent post exposing this last month (about half way down the page). Let’s expose this figure manipulation!
Last month’s figures
and yet MORE commentary
Tony Crescenzi Blog
Home Loans Steadying
By Tony Crescenzi
RealMoney.com Contributor
6/26/2006 12:18 PM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10293746.html
The Federal Reserve reported late Friday that home equity loans stood at $428.5 billion in the week ended June 14, once again holding above the 11-month low set six weeks earlier.
The data suggest that home-related borrowing might be stabilizing after a steady decline. When combined with today’s data on new home sales, the housing situation does not appear to be as bleak as many believe. The current level is now $10.4 billion below the peak of $438.9 billion last September.
Home equity lending has trended downward since last summer after having increased about $100 billion the previous year. Despite the recent steadying, the contraction removes a key stimulus for the economy — the so-called housing ATM. With sales having peaked and mortgage equity withdrawals (MEW) having declined, some housing-related slowing in the economy is likely. This should provide the Fed with a basis for ending its interest rate hikes, although it is not as strong a case as many had previously expected.
An interesting counterargument is the notion that any decline in home equity withdrawals will be offset by a gain in withdrawals of monies from financial assets, historically a top source of funding for personal consumption. In recent years, consumers tapped their homes for money, and there is evidence that they withdrew similarly less from their financial assets. This means that the home equity withdrawals were not an additional source of money, but a substitute for withdrawals that would have been taken from financial assets. As a result, any decrease in MEW will be made up by withdrawals from financial assets, such as certificates of deposits, stocks and bonds.
It sounds to me that the sales activity in the heartland is defintely offsetting the bad numbers in the bubble areas. It is very difficult to get an accurate read on RE from a national perspective. RE is cyclical and it is not linear, some markets are further into the current cycle than others. If you live live in places like California the anecdotal signs of a slowdown are everywhere, I couldn’t count how many Open House signs I saw this weekend. We could be in a situation where the FED has already over shot and continues to tighten. These benign reports on housing could prove to be devastatingly misleading. IMO the bubble areas of CA, FL, VA, NY among others are on the verge of a route. The inventory build in CA is unprecedented. If you want to get a read on how this impacts the economy follow the job reports of the most over heated markets. If the loss of construction and RE related jobs are not offset by other Service and Professional jobs than its over. Many feel we are looking at a housing led recession, the local economies of the bubble markets will be the canaries in the coal mine.
Every time I get info that this market is different and local, and keep reminding myself that the Federal reserve sets interest rates for the whole United States. The same interest rates that have risen 17 times in Los Angeles have risen 17 times in Boise. When interest rates rise, 10 year Tresury Bonds go down…and so will housing on a national scale…just some local markets got a head start on the downward spirial.
I still smell a dot.com blow out starting July 4, 2006
“The homebuilders (new homes) are cannibalizing the sales for the resale market. ”
Exactly and to the point. Lets not forget this was do to incentives. This means resale market will need to drop prices even more to offset those free Plasma TV’s and other incentives by HB.
if people are interested in how many months the hard crash will take- here is a cool chart comparing current housing bubble to dot.com
http://jessel.100megsfree3.com/housingbubblecompared.gif
Am starting to see a different tone with even the most rah-rah of RE cheerleaders. Watched a show this weekend called “Flip It Fast” and they used the phrase “Bubbles burst and prices crash” (or something close to that.) Then the show went on to explain how these guys were trying to get around it. But it is the first of these shows to emphasize that there is not necessarily easy money in flipping a house. Also, it was done this spring I think and many of the other flipping shows are one to two years old. Just nice to see some warnings finally being issued.
Looking for the Bottom With Lennar
By Stephen D. Simpson, CFA (TMFWildWeasel)
June 26, 2006
Has homebuilder Lennar (NYSE: LEN) finally hit bottom? Cancellation rates and higher incentives are hurting margins and sales and are leading this company to lower guidance — just as Toll Brothers (NYSE: TOL), KB Homes (NYSE: KBH), and so many others before them have experienced.
But wait a minute — didn’t folks ranging from realtors to brokers to industry representatives assure us all that there was no housing bubble? Wasn’t talk of rank speculation just a myth? To be fair, the folks in Lennar management weren’t responsible for any of that — but they’re still suffering the aftermath of a market that got itself overheated.
Then again, it’s not as if the quarter that Lennar reported was all that rotten. Revenue was up 56% as reported, with a 40% hike in deliveries leading to a 53% jump in revenue from home sales. Gross margins did ease off, though, and operating earnings from homebuilding were up 25%.
Of course, Wall Street cares primarily about the future. To that end, new orders were down 3% (though up in the company’s Central region), backlog value fell by 11%, and the company did warn of continuing deterioration in several large markets. It also observed that there has been a “wholesale evaporation” of speculators and that many, if not most, folks who sought easy money in the housing market have since packed up and left.
That last bit is the best news of all, in my opinion. See, at least two of the major fundamentals of the new housing market — employment and interest rates — are still pretty good. Speculative froth, though, made affordability more of an issue. If speculators have moved on to other projects, maybe pricing can get back in line with historical trends — though this will be an unpleasant adjustment — and the business can get back to a more normal situation.
The risk in buying a stock like Lennar is that things can get even worse. Lennar holds a lot of land, second to Toll Brothers and ahead of the likes of Pulte (NYSE: PHM) and Hovnanian (NYSE: HOV), and a protracted slowdown could lead to asset writedowns — though the long-term history of American real estate is that prices increase. By the same token, Lennar has a good record of producing returns on its capital, and that makes it at least worth consideration for those looking to play the eventual recovery in this sector.
For more homey Foolishness:
New Home Sales Data …..
This is contracts signed, not homes sold.
It does not take account cancellations (running as high as 20 - 50%)
All time high inventory of New Homes for sale.
It’s just more fuel for the fed to raise rates further - and effects will be that much more dramatic.
NAR and HB’s will likely look back and wish the data were exagerated in the other direction.
- Saves
- Saves
I wasn’t surprised by these numbers today. The home builders will do whatever they can to unload these houses. Heck, a community near me here in Bradenton, FL had a “fire sale” this past weekend. They were selling their $500k stucco boxes for $380k. If I was a buyer on the edge, this would be enough to pull me in and especially will pull in the clueless Joe’s that have no idea housing is slowing down. They think they are getting the “instant $120k equity!”