Christian Real Estate Blog

Demand for New Houses Softens in Several Markets

RealEstateJournal | Demand for New Houses Softens in Several Markets: "Several home builders say they are seeing softening demand for homes in a number of markets around the country, coming on the heels of a sharp drop-off reported by luxury-home builder Toll Brothers Inc. last month.

'We are seeing a slowing in the sales pace' so far in 2006, said Lennar Corp. Chief Financial Officer Bruce Gross, at the Wachovia Homebuilders Conference Tuesday. He said this is consistent with similar trends experienced by rival builders.

Ryland Group Inc., in a Securities and Exchange Commission filing Friday, said it has seen a decline in orders in the first two months of the year. During the conference, Ryland Chief Executive Chad Dreier said demand has declined in certain markets, such as Washington, D.C.

'There is an investor [speculation] overhang in that market [Washington], and it's going to take a couple of months to clear out,' he said, referring to a flurry of speculative buyers who are now leaving the market and have put their homes up for sale. Indianapolis, Cincinnati and Minneapolis have been flat, but he said the markets in Florida and Texas as well as Atlanta and Charlotte, N.C., remain healthy.

He said some markets -- such as Phoenix, Las Vegas and parts of California -- have seen softening order trends largely due to a lack of inventory related to delays in the opening of subdivisions, not a pullback in demand.

Toll Brothers last month said orders -- which serve as a barometer for revenue the company will receive when a home is delivered three or four quarters later -- plunged 29% in the first quarter that ended Jan. 31. The company said it expected orders to be weak for the next two quarters, before rebounding in the fiscal fourth quarter.

Standard Pacific Corp. said Monday that orders fell 13% in the first two months of 2006, largely as a result of sharp declines in California and Florida. This was partly offset by increases in Arizona and Texas."

posted by Justin Smith @ 3/28/2006 08:49:00 AM