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Case Shiller reports home prices decline, again

BY HBSDEALER Staff

The S&P/Case Shiller Index, a bellwether for the new housing market, has reported that home prices for the month of February 2011 continue to fall from their year-ago levels but remain slightly above the April 2009 bottom point. 

The 10-City and 20-City composites fell 2.6% and 3.3% respectively from their February 2010 levels. Washington D.C. was the only market to post a year-over-year gain with an annual growth rate of 2.7%.

Ten of the 11 cities that made new lows in January 2011 saw new lows again in February 2011. Detroit avoided another new low, managing a 1.0% increase in February over January, the only city with a positive monthly change.

In month-over-month comparisons, February’s 10-City and 20-City composites were both down 1.1% from their January 2011 levels. Nineteen of the 20 MSAs and both the 10-City and 20-City composite fell in February versus January. Of these, 14 MSAs and both composites posted negative monthly returns for more than six consecutive months. With the February 2011 report, 11 of the 20 MSAs and both composites are down by more than 1% compared to their January levels. 

“There is very little, if any, good news about housing,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “Prices continue to weaken, while trends in sales and construction are disappointing. ”He described the 20-City Composite as “within a hair’s breadth of a double dip.” 

Atlanta, Cleveland and Las Vegas join Detroit as cities with home prices below their 2000 levels, according to Blitzer, and Phoenix is barely above its January 2000 level after a new index low. The one positive is Washington D.C. with a positive annual growth rate of 2.7%, and home prices more than 80% over its January 2000 level.

 

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Confidence rises slightly, says Conference Board

BY HBSDEALER Staff

The Conference Board Consumer Confidence Index increased slightly to 65.4 in April, up from 63.8 in March, and up from 57.7 in April 2010.

"Consumers’ short-term outlook improved slightly, suggesting that the uncertainty expressed last month is easing. Inflation expectations, which had spiked, retreated somewhat in April," said Lynn Franco, director of The Conference Board Consumer Research Center. "Although confidence remains weak, consumers’ assessment of current conditions gained ground for the seventh straight month, a sign that the economic recovery continues.”

The Present Situation Index increased to 39.6, up from 37.5. 

While those expecting business conditions to improve over the next six months declined to 18.8% from 20.8%, those anticipating business conditions to worsen decreased to 14.2% from 15.5%.

The closely watched confidence metrics follow reports of slight month-to-month improvements in new home sales and residential construction.  

 

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Builder forecast: Chilly start, followed by tough conditions

BY HBSDEALER Staff

A just-released report on the homebuilding industry from Standard & Poor’s has predicted “tough conditions” and no major improvement over the remainder of the year in the U.S. homebuilding market.

"U.S. home builders got off to a very slow start in 2011 as winter storms contributed to a record low level of new home sales in February," said credit analyst James Fielding, a senior director in Standard & Poor’s U.S. real estate companies group. "Our baseline scenario for the rest of the year includes a slight warm-up as the spring selling season progresses, but we don’t expect to see significant improvement over a very weak 2010."

Fielding also noted it will be difficult for builders to keep their liquidity intact if they opt to attain market share via aggressive land purchases. Standard & Poor’s, a credit rating agency, expects issue increasingly negative rating outlooks for the U.S. homebuilding sector.

"In essence, we do not yet believe that key economic drivers of housing demand, such as consumer confidence, employment growth, and household formation, are supportive of a strong recovery in the homebuilding sector,"  Fielding said. "In fact, we currently don’t anticipate upgrading any homebuilder in 2011, barring company-specific events such as a successful recapitalization."

Of the 15 builders Standard & Poor’s rates, three are rated in the ‘BBB’ category, three are in the ‘BB’ category, seven are in the ‘B’ category, and two are in the ‘CCC’ category. Standard & Poor’s hasn’t changed any builder ratings this year, but it did downgrade KB Home, Lennar Corp., and PulteGroup Inc. during the second half of last year because new home sales dropped more than we had anticipated after the temporary tax credits for homebuyers expired.

For information about the full report, "U.S. homebuilders face a chilly start to the spring selling season," visit www.globalcreditportal.com

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