chicago-condos Administrator on 04 Jan 2007 04:19 pm
Housing Hasn’t Bottomed Out Yet, Say Builders
End-of-year housing-market data conveyed the impression that–with housing starts, sales, and homebuilder surveys no longer sinking after 12 to 18 months of steady declines–housing was stabilizing.
Feelings that “the worst is over” may be premature. First off, this year’s unseasonably warm weather may well be distorting the housing statistics. “Seasonal adjustment factors,” which adjust actual data for monthly variations (for example, more homes are generally started in June than in January) probably didn’t anticipate the Northeast’s unusually clement weather this December.
Even though homebuilding stocks have been performing better over the last six months, builders are not noticeably optimistic.
Anyone who thinks that “housing has bottomed should talk to Lennar,'’ says Paul Kasriel, chief economist for Northern Trust Corp. in Chicago.
A few days ago Lennar Corp., the nation’s fourth-largest homebuilder, announced its first loss in at least ten years in the quarter ended Nov. 30, after writing off the value of land it no longer plans to purchase. According to CEO Stuart Miller, market conditions steadily deteriorated over this period, with “no tangible visible evidence of a market recovery.”
Lennar and many other big builders will report their official fourth-quarter earnings in mid-to-late January.
While developers have been slashing prices and offering a variety of incentives to attract more buyers, it hasn’t solved the problem of excess inventory, according to Kasriel.
“Inventories of completed homes continue to increase, both in absolute terms and relative to their total inventories,'’ he said. “Historically, until the relative inventories of completed homes begin to decline, the starts of new homes continue to decline.'’
Because the Census Bureau, which maintains new home sales data, doesn’t capture project cancellations in the monthly statistics, sales are probably being overstated and inventories understated.
Chicago homes, Chicago real estate, real estate market conditions, Chicago home sales
Technorati Tags: Chicago homes, Chicago real estate, real estate market conditions, Chicago home sales
