Home sales numbers took a small blip up, so what? The important number to homebuilders is this: The median price for a home sold during June was just $181,800 -- 15.4% lower than 12 months earlier. And by 2008 home prices were already down significantly. That means that to compete in the market, homebuilders have to keep dropping prices, and that means selling at a loss. NO PROFITS in the future for homebuilders, just bankruptcy.
excellent point. I think what this market has taught us is that this is one of the only times in history where both longs and shorts got hosed. I have been stoped out of my short on TOL 6 times since october. these homebuilders just want to keep bouncing back. that might only mean that when the real drop comes, shorts will clean up. I hope so. But, not just yet. let them build up a bit more.
New home inventories have greatly declined in the last 12 months. By 2014, there will be a single family home housing shortage. The median price of single family homes sold in 2014 will be over $30,000 higher than they are now. Throughout history the housing industry builds too much inventory, or too little inventory. This cycle will be no different. With over 1.8 million population increases per year in the US, we need approximately 800,000 single family homes per year. Today, they are building about 450,000 per year. Yes, we have about 400,000 too many single family homes right now, but that inventory will be gone in 24 months. I'm not saying LEN is going to $20, but it should be in the the $16 range three years from now. LEN could go down to $9 in the short term, but it looks like the bankrupcy option is off the table, so LEN should head higher in the longer term.