U.S. Home Builders Benefited From Low Interest Rates This Year; Housing Starts Climbed and New-Home Sales Surged

Earlier this week, Wall Street Journal writer Will Parker reported that, “U.S. home builders benefited from low interest rates this year as housing starts climbed to levels not seen in a decade and new-home sales surged after a disappointing 2018.

“Builder confidence, as measured by the National Association of Home Builders, is now the highest since 1999. And publicly traded home-builder stocks beat the S&P 500 average this year, rising 40% as of Dec. 23, compared with the broad index‚Äôs 29% gain over the same period.

“Home builders cranked up volume partly by focusing on homes more buyers can afford. Large builders including Meritage Homes Corp. and MDC Holdings Inc. made strategic shifts to produce a higher number of less-expensive homes, targeted at a generation of millennials with lower purchasing power than average buyers in the past.”

The Journal article added that, “Strong buyer demand for more-affordable homes stoked mergers and acquisitions. In November, Taylor Morrison Home Corp. said it would purchase a West Coast competitor, William Lyon Homes, a company that does more than half of its business in the entry-level market. Scheduled to close in 2020 and valued at $2.4 billion, the deal was among the largest announced in the industry this year.

“Some home builders and analysts question whether growth will continue at the current pace next year. Fitch, for example, predicts new-home sales will only grow 1.5%, compared with 9% in 2019.”

This entry was posted in Real Estate Law. Bookmark the permalink. Both comments and trackbacks are currently closed.