Builders gear up to build more houses
By all indications the U.S. has more than the required number of houses in stock. According to data from the National Association of Realtors, at the end of March there were 3.6 million homes for sale. The average inventory of 鈥渇or sale鈥� homes is 2.7 million, so the excess supply is 900,000 units based on historical averages. NewObservations.net estimates the current supply to be 8.6 months worth, while the 10-year average has been 5.8 months.
Plus, anywhere from 11 million (First American鈥檚 estimate) to 25 million (Deutche Bank鈥檚 estimate) homeowners owe more on their homes than the homes are worth, keeping many homeowners where they are unless they decide to strategically default.
It doesn鈥檛 sound like the best environment for homebuilders to pay up for finished lot inventory to re-start home production. But the Wall Street Journal last week that PulteGroup Inc. out bid six other potential buyers for lots located in the Phoenix suburb of Gilbert.
鈥淟ot prices in Phoenix and Southern California鈥檚 Inland Empire have soared more than 60%. Sacramento, Orlando and Los Angeles are up between 30% and 40%.鈥�
, so they鈥檙e spending the money the only way they know how鈥揵uying land. Builders are even in hard-hit Las Vegas, where reportedly over 80% of homeowners are burdened with negative equity.
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