A statistic stuck out last week that summed up how lousy things are in housing right now. Homebuilder KB Home released their fourth quarter earnings and revenues were up 16%. Profit was up 30%. So what was the big deal? The cancellation rate, which was 68%. Two thirds of home orders were cancelled. That is a lot. To put that number into perspective KB Home’s cancellation rate in 2008 was only 51%.
All of the sound bites I get from owners and CEOs aligns with your concern about new home creation. The bottom fell out of the purchase market in early October. The question now is whether or not it will recover in the spring buying season. Interest rates will definitely play a big factor. If home purchase doesn't pick up, I expect to see a lot of pressure on home prices.
Week in Review: Trouble for the home building sector.
All of the sound bites I get from owners and CEOs aligns with your concern about new home creation. The bottom fell out of the purchase market in early October. The question now is whether or not it will recover in the spring buying season. Interest rates will definitely play a big factor. If home purchase doesn't pick up, I expect to see a lot of pressure on home prices.