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Homebuilders in crosshairs of rising rates

  • What gives? New home contracts fell sharply in July, but those for existing homes barely budged. The WSJ's Nick Timiraos has some ideas:
  • First, builders have been more aggressive in raising prices.
  • Second, builders are more reliant on mortgage-dependent buyers, while the resale market has seen a surge in all-cash purchases.
  • Third, some hustled to close on a purchase before rates rose, but you can't buy a home where construction isn't yet complete. So to the extent higher rates pull forward demand, it's likely to be seen in the resale market, not in new homes.
  • XHB, ITB, PKB, REZ.
Comments (1)
  • convoluted
    , contributor
    Comments (1865) | Send Message
     
    Vern, if the resale market has seen a 'surge' in all cash-buyers (whatever a 'surge' is), would that not lessen the number of resale properties, thereby shifting demand to newer proerties?
    What evidence supports the statement 'builders have been more aggressive in raising prices'? (first, however, a definition of 'aggressive' would be useful.
    '...some hustled to close on a purchase before rates rose.../but you can't buy a home where construction isn't yet complete.' Well, why would one 'hustle' to close where otherwise precluded. Presumably, if one is waiting for a builder to complete a contracted house, the date of the completetion would be legally binding-creating appropriate offsets for consequential damages.

     

    C'mon man!
    17 Sep 2013, 08:48 AM Reply Like
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