Homebuilders Surprised by Drop in Sales Following Expiration of Tax Credit

The slowdown shouldn't have been a surprise to anyone. I believe we'll only see a temporary uptick when govt. offers another financial incentive.

I believe we'll see more builders going under before the end of this year. 

M/I Homes and Ryland are NOT sitting on a huge inventory of lots, each holding about a 3.8 year supply, Meritage only a 3.2 year supply. 

Some buidlers, however, Brookfield for one is sitting on a 30+ year supply of lots.  Many, Lennar, Pulte, Toll Bros are sitting on a 10 year supply. 

Land holdings was one of the causes of builders going under in the 1989+ crash. 

We'll see.  Things are still favorable for new home builders in my area.  In fact, we have a new home buyer out this weekend.  There is virtually no standing inventory here. 

SURPRISE!! It's like a surprise party and everyone knew but them! How is that possible??

There was no doubt in my mind that the tax incentive would create a mad rush to buy that would consume what would have been sales in prior months.   Should stabilize after a few months but at what level?  We'll all just have to wait and see!

Which proves if you give people money to do things, they will do them.  But it is not stimulative until people are doing it on their own.  And when did it become stimulus for people in one state to subsidize people in another?

John and Lenn,

Interesting observations. Brookfield owns Royal LePage. While the Toronto market is still good, Brookfield's vulnerability may be elsewhere.

Brian

John,

There have been reports that the tax credit really didn't make much of a difference in sales, but now it looks as if it certainly had a nice positive effect on the struggling market, and after expiring at least the home builder volume has dropped quite a bit.