New-home sales will remain weak into 2012, said Bill Wheat, chief financial officer of D.R. Horton Inc., one of three U.S. homebuilders to predict a delayed recovery today.
“We don’t see the economic drivers to change in 2011,” Wheat, whose Fort Worth, Texas-based company is the second- largest homebuilder by revenue, said at a Wells Fargo & Co. (WFC) conference in New York today. “We feel it could still be a struggle in 2012.”
Homebuilders are fighting to compete with lower-priced existing homes as a glut of foreclosures drives down values. New houses sold at an annual pace of 300,000 in March, up from a nearly 50-year-low pace of 270,000 in February, the Commerce Department reported April 25.
The number of visitors and serious shoppers at homebuilder sales offices “weakened sequentially” in April from the previous month, Adam Rudiger an analyst with Wells Fargo Securities, wrote in a May 9 report based on a survey of 150 sales managers in 20 markets.
Five years into the housing slump, unemployment at 9 percent and a drumbeat of negative news continue to discourage buyers, Douglas C. Yearley Jr., chief executive officer of Toll Brothers Inc. (TOL), said at the Wells Fargo conference. Home prices may fall as much as 9 percent in 2011, Zillow Inc. said in a May 9 report.
“People are still scared,” said Yearley, whose Horsham, Pennsylvania-based company is the largest U.S. luxury-home builder. “We’re just disappointed that demand hasn’t come back better at this point.”
Jeffrey Mezger, CEO of Los Angeles-based KB Home (KBH), speaking at the conference today, said he expects sales to “bump along for the next 18 months.”
The Standard & Poor’s Supercomposite Homebuilder Index of 12 companies declined 1.5 percent as of 3:18 p.m. in New York.
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