You must understand, new home buyers are not foreclosure buyers. People that buy new, want new and the service that comes along with it. Foreclosures offers none of that.
Then there is the new homes that are not completed. These are not a great deal for the inexperienced buyer. And the experienced buyers recognize the cost and problems and they won't touch them. For example, a part completed house has the following issues:
1. The builder has drawn more out of the loan than he has put into the house.
2. The builder has not paid all the subs resulting in poor work, damages and liens.
3. If the house has been sitting for a year without a single inspection, you have to pull new permits and all new codes apply resulting in retro-fitting the structure.
Foreclosures does effect existing home sales as buyers don't value new construction are willing to jump in.
I saw an article in Orlando Sentinel (some months back) that in Orange County (where Orlando is) alone there were over 3500 brand new homes, never lived in, sitting on the market.
I saw ads for 3500 sq ft homes for $195,000. Brand new. I don't know who was selling them. The banks? Speculator/builders? PHM? I dunno. It was 6 mos. ago, but frankly I can't believe all those houses have been sold yet, nor will be this year. And whoever is selling them must be getting killed financially. Interest rates are insanely low. Prices are low. Supply is enormous. Frankly, the best thing that could happen is for the banks or the gov't to just bulldoze thousands of empty housing. Just wait. When you see on the news that these development ghost towns in California, Nevada, Arizona and Florida are being condemned and razed. That's when the HBs will be a buy.
Well, I do agree with you that the fewer and bigger HBs will be and are positioned to recover before the small guys. I still believe housing will be one of the last sectors to rebound. I am a small business owner with a very (yet profitable) descretionary service to sell. My area (CT) was never as badly affected as others with the housing bubble. Nor, because we no longer have big tracts of developable land on which to build lots of houses, did we much of the Pulte's et al in this area. We have tons and tons of unsold housing. It's incredible around here and yet, when I was recently in Florida it was 10 times worse. I will be in Southern California next month. That should also be interesting. Nevertheless, I could see PHM up a little, but frankly, if the S&P wants to revisit 1000 (and I think it will) we may see PHM back to sub $10. I'll buy cheaper. If I miss it....no big whup. GLTA.
The way I am playing earnings is I sold 1/3 of my holdings today. If the news is bad, I will pick up some more to trade. If it is good, I will let what I have ride.
The major factor is the write-downs. If they follow DR Horton's lead, they will stop the write-downs and they will report a upward surprise. My bet is that they will record more write downs this quarter and save the best for next quarter.