Latest Homebuilding Trends [Housing Tracker]

Quote of the Day

"Lennar does not even own a hammer.” –  Lennar Corp.’s General Counsel Mark Sustana, about Lennar’s homebuilding methods. The company subcontracts all of its construction work.  (Law.com, July 2^nd)

Construction Spending Dips Slightly in May.  “Census Bureau: While new single-family construction spending declined 3.4% between April and May of this year to land at a seasonally adjusted annual level of more than $197 billion, that dip [6%] represents one of the smallest such drops in the sector during the last year. Industry watchers sound practically bullish [now], despite May's 39.2% year-over-year reduction in new single-family construction activity. Housing analyst Ivy Zelman of Zelman and Associates: “The year-over-year declines stabilized [in Q2], reaching a near-term trough in March." Census: Overall, total construction spending, which includes public works as well as private projects, hit a seasonally adjusted level of $1.1 trillion in May.”  (Builder Online, July 1^st)

New Homes Could Get New Warranties.   Arizona: “Buyers would be entitled to a 10-year warranty when they purchase new homes under the terms of an initiative apparently headed for the statewide ballot. The total [supporting signatures] submitted is far more than the 153,365 necessary to qualify for ballot status. The initiative, financed almost exclusively by the Sheet Metal Workers International Association, also would: Allow homeowners to help choose the contractors hired by the builders to make the repairs; Give buyers the right to cancel within 100 days and get back most of their deposit; Let homeowners sue without fear of having to pay a builder's legal fees if they lose.”  (AZ Starnet, July 1^st)

Georgia Builder Shuts Its Doors.  “Robert Harris Homes, the industry’s 135th-largest builder in closings in 2007, has suspended its operations. Last week, the Ga.-based builder, which was founded in 1994, informed its field sales agents and brokers by email that it was closing its doors... Tim McReynolds, the builder’s vice president of sales and marketing, told the Atlanta Journal-Constitution last week that he had been let go after joining the company in December.”  (Builder Online, July 1^st)

Carolina and Gulf Coasts Remain the Strongest Housing Markets.  “In addition to falling home prices, recession level consumer confidence, and tighter mortgage underwriting standards, new home demand is now being restrained by shrinking contractor margins from an abrupt jump in building cost and a 50 basis point jump in mortgage rates caused by a rise in inflation expectations by lenders. Homebuilders have now been hit with the spike in materials costs that appeared a few months earlier in nonresidential markets. Although lumber, plywood and gypsum pricing remains weak, the prices for metal and energy based materials are now rising at a 20% plus annual pace and delivery surcharges are raising the price of all items at the jobsite.”  (Reed Construction Data, July 1^st)

Builders: Regulations Keep Suburban Home Prices Unreasonably High.  Minnesota: “Stephen Paul’s $240,000 D.R. Horton home in Lakeville is a masterpiece of cost cutting — one of the least expensive new three-bedroom homes in the area. Yet the price isn't close to the $200,000 that is deemed affordable for typical Twin Cities incomes. The reason is regulations — affordability's worst enemy. Paul and every other homebuilder could be selling new houses and town homes for at least 20% less — if regulations permitted it — experts say… Decades of regulations have smothered affordability. Harvard's Rappaport Institute for Greater Boston put the cost of regulation in Massachusetts at 30% of a home's cost.”  (Twin Cities, July 1^st)

Court Victory Gives Builders A Boost.  “Beleaguered homebuilders got some good news last week from an unlikely source: the Appellate Division of New Jersey’s Superior Court. The ruling struck down two long-standing ordinances that require developers to donate land, cash or recreational facilities to municipalities where they seek to build. Communities involved in the case are likely to appeal. For years, NJ municipalities have enforced a patchwork of regulations that call for developers to make contributions before winning approval to put up residential or other complexes. The demands have increased as housing prices rose and undeveloped land became harder to find.”  (NJ Biz, June 30^th) 

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

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