bdc63
08-17-2006, 05:05 PM
FYI for those that might have missed this report:
Aug. 15 (Bloomberg) -- Confidence among U.S. homebuilders plunged to the lowest level in 15 years this month as buyers cancelled orders and inventories of unsold dwellings piled up, a private survey showed.
The National Association of Home Builders/Wells Fargo index of builder confidence fell to 32 from 39 in July, the Washington- based association said today. It was the seventh consecutive monthly decline.
Homebuilders including Toll Brothers Inc. and Hovnanian Enterprises Inc. are slashing profit forecasts as high borrowing costs and home prices keep many potential buyers out of the market. Trade groups forecast U.S. home sales will fall for the first time in six years in 2006, contributing to a slowdown in economic growth.
``A decline in sentiment means builders are pulling back aggressively,'' Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York, said before the report. ``We already have a problem of high inventories. Builders are making sure it doesn't get worse.''
The confidence survey asks builders to characterize current sales as ``good,'' ``fair'' or ``poor.'' Readings below 50 mean more builders view conditions as poor.
Economists polled by Bloomberg News forecast an August reading of 38, the median of 21 projections. The latest figure is the lowest since February 1991. The index averaged 67 last year.
All three component indexes declined to their lowest levels since 1991. A measure of sales expectations for the next six months fell to 40 from a revised 46 in July. The index of buyer traffic dropped to 21 from 27. The gauge of current sales declined to 36 this month from 43.
Erosion to Continue
``Two big factors are coloring builders' perceptions of the market right now, rising sales cancellations and substantial growth in inventories of both new and existing homes,'' David Seiders, chief economist at the National Association of Home Builders, said in a statement. ``We expect the erosion in market activity to continue through most of this year before stabilizing in 2007.''
Confidence fell in all four regions, led by the West, where it slid to 42 from 52 in July. The South reported a drop to 41 from 50, and the Midwest to 15 from 20. Confidence in the Northeast fell to 34 from 37, the report showed.
Mortgage rates that are close to the highest in four years have discouraged potential home buyers. The average rate on a 30- year fixed mortgage rose to 6.55 percent for the week ended Aug. 10 from 5.89 percent a year earlier, according to Freddie Mac.
The end of the five-year housing boom is paring economic growth, helping convince the Federal Reserve to keep interest rates unchanged last week after 17 consecutive increases over a period of two years.
Growth Moderates
``Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices,'' the Fed said in its statement.
Gross domestic product will expand at an average annual rate of less than 2.8 percent in the second half of the year, compared with a 4.1 percent first-half pace, according to the median forecast of 69 economists surveyed from July 28 through Aug. 10.
Americans bought fewer new homes than forecast in June, leaving a record number of unsold dwellings on the market, the Commerce Department said July 27. Sales of previously owned homes fell to the lowest in five months, the National Association of Realtors said July 25.
The glut of unsold homes is trimming profit margins at builders and prompting them to offer incentives such as luxury- car leases, free golf course memberships and sub-zero refrigerators.
`Bumpy' Market
Toll Brothers, the largest U.S. luxury home builder, said on Aug. 9 that homebuilding revenue in the quarter ended July fell for the first time in four years.
Hovnanian, New Jersey's largest homebuilder, said Aug 4. that profit this year will be as much as 32 percent lower than predicted. KB Home has forecast 2006 profit will grow at the slowest pace in five years.
``The market is very, very bumpy,'' Bruce Karatz, chief executive officer of KB Home, said in an interview on Aug. 9. ``It is a very uncertain period for home buying'' and there is ``tremendous hesitation'' among buyers.
The 16-member Standard & Poor's Supercomposite Homebuilding Index, which includes Toll Brothers, has fallen 39 percent since the beginning of the year.
Housing starts probably fell to a 1.81 million annual rate in July from 1.85 million the month before, economists in a Bloomberg survey said ahead of tomorrow's Commerce Department report. Building permits, a sign of future construction, may have dropped to a 1.84 million rate from 1.862 million.
Aug. 15 (Bloomberg) -- Confidence among U.S. homebuilders plunged to the lowest level in 15 years this month as buyers cancelled orders and inventories of unsold dwellings piled up, a private survey showed.
The National Association of Home Builders/Wells Fargo index of builder confidence fell to 32 from 39 in July, the Washington- based association said today. It was the seventh consecutive monthly decline.
Homebuilders including Toll Brothers Inc. and Hovnanian Enterprises Inc. are slashing profit forecasts as high borrowing costs and home prices keep many potential buyers out of the market. Trade groups forecast U.S. home sales will fall for the first time in six years in 2006, contributing to a slowdown in economic growth.
``A decline in sentiment means builders are pulling back aggressively,'' Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York, said before the report. ``We already have a problem of high inventories. Builders are making sure it doesn't get worse.''
The confidence survey asks builders to characterize current sales as ``good,'' ``fair'' or ``poor.'' Readings below 50 mean more builders view conditions as poor.
Economists polled by Bloomberg News forecast an August reading of 38, the median of 21 projections. The latest figure is the lowest since February 1991. The index averaged 67 last year.
All three component indexes declined to their lowest levels since 1991. A measure of sales expectations for the next six months fell to 40 from a revised 46 in July. The index of buyer traffic dropped to 21 from 27. The gauge of current sales declined to 36 this month from 43.
Erosion to Continue
``Two big factors are coloring builders' perceptions of the market right now, rising sales cancellations and substantial growth in inventories of both new and existing homes,'' David Seiders, chief economist at the National Association of Home Builders, said in a statement. ``We expect the erosion in market activity to continue through most of this year before stabilizing in 2007.''
Confidence fell in all four regions, led by the West, where it slid to 42 from 52 in July. The South reported a drop to 41 from 50, and the Midwest to 15 from 20. Confidence in the Northeast fell to 34 from 37, the report showed.
Mortgage rates that are close to the highest in four years have discouraged potential home buyers. The average rate on a 30- year fixed mortgage rose to 6.55 percent for the week ended Aug. 10 from 5.89 percent a year earlier, according to Freddie Mac.
The end of the five-year housing boom is paring economic growth, helping convince the Federal Reserve to keep interest rates unchanged last week after 17 consecutive increases over a period of two years.
Growth Moderates
``Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices,'' the Fed said in its statement.
Gross domestic product will expand at an average annual rate of less than 2.8 percent in the second half of the year, compared with a 4.1 percent first-half pace, according to the median forecast of 69 economists surveyed from July 28 through Aug. 10.
Americans bought fewer new homes than forecast in June, leaving a record number of unsold dwellings on the market, the Commerce Department said July 27. Sales of previously owned homes fell to the lowest in five months, the National Association of Realtors said July 25.
The glut of unsold homes is trimming profit margins at builders and prompting them to offer incentives such as luxury- car leases, free golf course memberships and sub-zero refrigerators.
`Bumpy' Market
Toll Brothers, the largest U.S. luxury home builder, said on Aug. 9 that homebuilding revenue in the quarter ended July fell for the first time in four years.
Hovnanian, New Jersey's largest homebuilder, said Aug 4. that profit this year will be as much as 32 percent lower than predicted. KB Home has forecast 2006 profit will grow at the slowest pace in five years.
``The market is very, very bumpy,'' Bruce Karatz, chief executive officer of KB Home, said in an interview on Aug. 9. ``It is a very uncertain period for home buying'' and there is ``tremendous hesitation'' among buyers.
The 16-member Standard & Poor's Supercomposite Homebuilding Index, which includes Toll Brothers, has fallen 39 percent since the beginning of the year.
Housing starts probably fell to a 1.81 million annual rate in July from 1.85 million the month before, economists in a Bloomberg survey said ahead of tomorrow's Commerce Department report. Building permits, a sign of future construction, may have dropped to a 1.84 million rate from 1.862 million.