Highest Unsold Home Supply Since '82 Seen Needing 50% Reduction

[marmar]

from Bloomberg:



Highest Unsold Home Supply Since '82 Seen Needing 50% Reduction

By Brian Louis

Aug. 7 (Bloomberg) -- Hovnanian Enterprises Inc., New Jersey's largest homebuilder, cut the number of unsold houses by more than 50 percent over the past two years after lowering prices and still had 1,500 on its books as of April.

``We pretty much start a home these days when we have a contract from a buyer wanting to purchase one,'' Chief Financial Officer Larry Sorsby said in an interview from his office in Red Bank, New Jersey. The company's sales price in the northeast for homes under contract dropped 7.4 percent in April from a year earlier. ``We don't build them and hope they come,'' he said.

There are 3.9 million unsold existing single-family homes, the most since at least 1982, when the Chicago-based National Association of Realtors started compiling the data. The inventory of existing houses and condominiums must fall by almost 50 percent for prices to stabilize, said William Wheaton, an economics professor at the Massachusetts Institute of Technology in Cambridge. There is an 11.1 month supply of existing unsold homes at the current sales pace, up from 4.6 months in September 2005, according to the National Association of Realtors data.

It now takes 10 weeks to 12 weeks on average to sell a house, compared with four weeks or five weeks at the height of the five-year housing boom, said Walter Molony, a spokesman for the Realtors group.

`Fifth Inning'

Homebuilders are facing record foreclosures, waning consumer confidence and stricter mortgage standards. Almost one of every 10 U.S. mortgages was in trouble during the first quarter, the highest in records dating to 1979, according to the Washington-based Mortgage Bankers Association. Delinquencies, or home loans with payments 30 days or more overdue, rose to 6.35 percent of outstanding mortgages and the share of homes in foreclosure rose to 2.47 percent.

``It's going to take several years to get rid of all this inventory,'' Eli Broad, the philanthropist who co-founded Los Angeles-based KB Home, said in an Aug. 1 interview. Homebuilders have no choice but to sell at ``discounted prices,'' he said. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ1WxOcnldhw&refer=home

[TechBear_Seattle]

1. If anything in the Seattle area drops to a reasonable price, I'd be glad to help

Unfortunately, even small condos are going for $300,000; you don't want to know what actual houses are being sold at.