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Home Builders See Cooling Prices
May 15, 2006
An industry report reflecting the bleakest outlook for the single-family real estate market since the mid-1990s pushed down shares of home builders in afternoon trading Monday.
The May Housing Market Index, released at about 1 p.m., declined six points from a seasonally adjusted reading last month to 45. The rating is the lowest since 1995.
Each month, the National Association of Home Builders and Wells Fargo survey home builders' present sales, expectations for sales for the next six months and ratings for traffic of prospective buyers. A composite reading below 50 indicates that more builders regard sales conditions as poor than good.
The NAHB blamed rising mortgage rates and ballooning prices for the weakened single-family housing market. Real estate investors and speculators have also begun retreating from a real estate market long dubbed a "bubble."
The NAHB projects home sales will fall 12 percent in 2006 from record sales in 2005, and new single-family home starts will decline 7 percent from last year.
The index has declined on a seasonally adjusted basis every month since January. In May, builder confidence declined in every geographic region, the NAHB said, falling hardest in the West.
Shares of the major home builders dropped after the release of the report. Horsham, Pa. luxury builder Toll Brothers Inc. fell 41 cents, to $28.31. Fort Worth, Texas-based DR Horton Inc. fell 71 cents, or 2.4 percent, percent to $28.34. KB Home, of Los Angeles, fell $1.30, or 2.3 percent to $56.50, while Miami-based Lennar Corp. gave up 81 cents to $49.73. Pulte Homes Inc. of Bloomfield Hills, Mich., lost $1.05, or 3 percent, to $33.37, and Dallas-based Centex Corp. declined $1.35, or 2.5 percent to $52.70, all in afternoon trading on the New York Stock Exchange.
Source: http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=AP&Date=20060515&ID=5722023
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