Year off to dismal start in home prices
Data released by the S&P/Case-Shiller Home Price Indices showed further declines in U.S. home prices in January 2011. Of the 20 MSAs covered by the indices, 13 showed further deceleration in their annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January.
The 10-City Composite dropped 2.0%, and the 20-City Composite fell 3.1% from their January 2010 levels.
San Diego and Washington, D.C., were the only two markets to record positive year-over-year changes. These are the only two cities whose annual rates remained positive throughout 2010.
“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”
Blitzer also said that he was seeing “renewed weakness” in some cities that were among the last to reach their peaks, including Atlanta; Charlotte; Portland, Ore.; and Seattle, where new lows are being recorded. Dallas, which peaked late, has so far stayed above its low mark of home prices in February 2009.
Home builder Lennar Corp. posts Q1 profit
Miami-based home builder Lennar Corp. posted a profit of $27.4 million in the first quarter ended Feb. 28. That compares with a loss of $6.5 million in the same quarter last year.
Revenues were down 3% to $558.0 million, as the company’s gross margin on home sales improved 80 basis points to 20.0%.
"We remained focused on the core fundamentals of our business, generating profitable results in each of our business segments," said Lennar’s Stuart Miller, president and CEO. "Our home-building segment continued to produce strong gross margins, benefiting from our intense focus on controlling construction costs and opening new high-margin communities."
The company reported new orders of 2,267 homes, down 12%, with a cancellation rate of 17%.
"While it is unclear whether the spring selling season will gain momentum or continue its sluggish recovery, we are confident that our company is well positioned for a profitable year in 2011," Miller added.
Japan disaster could boost commodity prices
An analyst for a major Canadian bank has predicted that prices for lumber, plywood, steel and other commodities will rise over the next six to eight months due to the rebuilding efforts in Japan.
As reported in the Montreal Gazette and other media outlets, Scotiabank’s commodities expert Patricia Mohr said that reconstruction in Japan will boost demand and prices for lumber, panelboard and plywood, especially from West Coast producers, and also for steel and many other metals.
As for energy, Japan is turning to imported liquefied natural gas (LNG) and crude oil to offset the loss of its nuclear power capacity, Mohr said.