June 8, 2009
Optimistic signs for U.S. housing market
Homebuilders across the United States say they are finally seeing signs the three-year housing downturn is ending.
This week, both Toll Brothers Inc. and Hovnanian Enterprises Inc. were the latest builders to report smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes.
Toll said it has seen an increase in homebuyers putting down deposits during nine of the past 11 weeks, compared to weekly figures from fiscal 2008.
“In the last couple of weeks, which on a seasonal basis should stink, we do see fewer (contract) cancellations coming in than we would have normally expected,” said Robert Toll, chief executive.
None of them, however, is ready to jinx it by calling the bottom.
They say the recession and fear of job losses are keeping many would-be homebuyers on the fence.
“There certainly are risks remaining,” chief executive Ara Hovnanian said, noting that a recent increase in mortgage rates and another year of rising foreclosures, among other dangers.
“In short, we are mindful that there’s still some pain that lies ahead ...” the executive added.
Still, even in places like Stockton, Calif., one of the epicentres of foreclosure in the country, there is now less than a two-month supply of homes for sales, Hovnanian said.
The builder reported a jump in new home contracts during the quarter, a lower number of buyers backing out and more stability in home prices the last six weeks.
However, while Hovnanian’s new home orders per community jumped 25 per cent in its second quarter, new home contracts were down 29 per cent overall from a year earlier.
Toll Brothers, meanwhile, saw completed sales decline 47 per cent versus a year ago. New orders fell 27 per cent.
The builder said it lost $83.2 million on sales of $398.3 million in the fiscal quarter ended April 30.
Beyond homebuilders’ financial results, recent data also suggest positive housing trends.
The rate at which homes lost value slowed in the first quarter, according to an analysis of metro areas by IHS Global Insight.
The most severe price declines continued to be seen in Florida, California, Nevada and Michigan.
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