Click to enlarge
Chart
Source: Bloomberg
 

 

Interesting chart form Dave Wilson showing how elusive the U.S. housing market’s rebound  has been for the Homebuilders.

Existing single-family homes sold at about the same pace in May as they did in January 2000, according to data compiled by the National Association of Realtors. New home sales are running a full 45% lower. One new home was sold last month for every 9.7 resales.

Bill McBride of Calculated Risk observed: “Builders weren’t able to compete with the low prices of all the foreclosed properties.”

 

 

Source: 
Housing Recovery Elusive for U.S. Homebuilders
David Wilson
Bloomberg, June 26, 2013

A few comments on House Prices and New Home Sales
Bill McBride
Calculated Risk, 6/25/2013 http://www.calculatedriskblog.com/2013/06/a-few-comments-on-house-prices-and-new.html

Category: Cycles, Real Estate, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “Housing Recovery Elusive for U.S. Homebuilders”

  1. capitalistic says:

    There’s massive existing inventory off and on market. I’ve been sifting through a list of distressed 9,000 SFR units in three “stable” states. A good strategy for home builders is to build and sell in bulk to bulk buyers, or rent these units out to brokers and let the brokers handle the rental income. But I digress…

    • Angryman1 says:

      a lot of this inventory is doa. It shouldn’t even be counted on the market. Thus, there is no “massive” inventory.

  2. brentnyitray says:

    Low household formation numbers are a big reason for this… College grads who couldn’t find jobs moved back in with parents and roomed with other classmates. We recently popped the champagne for a 1 million housing starts number that would have been considered a disaster in any other recession. Heck, from 1959 through 2002, we averaged 1.5 million starts a year. We haven’t sniffed that number for over six years.

    Both Lennar and KB Home conference calls were very bullish… The first time homebuyer is back. The low household formation numbers created a lot of pent-up demand. If jobs get any sort of footing, the homebuilders will do fine.

    Re shadow inventory, I wonder how much of that is actually saleable. There are huge swaths of REO homes in the Rust Belt that will never sell because population is shrinking in those areas. It is hard to consider that “excess supply” that is sucking up demand elsewhere in the country.

  3. brentnyitray says:

    FWIW, 60% of KB’s business is 1st time homebuyers. Of course they are talking their book, but even Lennar said some of the same things..

    • Good data point — maybe my bias is regional

      Also, I would distinguish between new household formations and 1st time buyers — while suspect there is a substantive overlap, they are not the inter-changable groups

      • brentnyitray says:

        Agree. I would also point out that the rent vs buy decision is about as skewed towards buying as it has ever been..

        The problem for the first time homebuyer, IMO, is student loan debt. High debt to income ratios are preventing them from qualifying for a mortgage.

  4. [...] I posted a chart showing how weak New Home Sales were relative to existing home [...]

  5. [...] Housing Recovery Elusive for U.S. Homebuilders Barry Ritholtz [...]

  6. overanout says:

    In Calif the low hanging fruit has been picked as builders wanting to develop large housing tracts on AG property or hillside lots face numerous financial issues:

    1. Auto expenses for fuel at $4 a gal, bite hard and long distance driving to work means auto’s maintenance cost comes faster for new tires,brakes along with faster depreciation on the vehicle.
    2. Roadway congestion has become the State’s alternative to road building
    3. Many potential home building locations need expensive sewage treatment upgrades or new facilities
    4. Many new and older locations do not have enough water supply for both Ag and new home development
    5. Redevelopment is now over in Calif, thanks to Gov Brown, counties and cities are digesting years of over spending using the bond market to supply funding for schools,shopping centers, new roads etc. Cost for new schools, roads sewer and water must come from current residents through higher property taxes.

  7. [...] Housing recovery not so great for home builders: Existing single-family homes sold at about the same pace in May as they did in January 2000, according to data compiled by the National Association of Realtors. New home sales are running a full 45% lower. One new home was sold last month for every 9.7 resales. [...]