Cautious Homebuilding Outlook for 2007
Thursday, January 11, 2007
Homebuilder News from MarketWatch: "Despite contentions that the housing market is forming a bottom, 2007 will see 'a continuation of the challenging operating environment' for home builders, wrote Raymond James & Associates analyst Rick Murray in a report Wednesday.""'Our fundamental outlook is one of caution, believing that the slowdown is likely to be longer in duration and more difficult than many are forecasting based on inventory levels that are stubbornly high and home prices that are broadly unaffordable,' he said."
"Many residential builders are also taking charges on real estate holdings that have fallen in value, and as they write off land options they've decided not to pursue. 'Since we think home-price declines will continue to pressure earnings, 2007 write-downs could equal 5% to 6% of equity written off in 2006,' wrote Deutsche Bank analyst Nishu Sood, estimating that impairments are likely only half-way done."
"There could also be an upcoming 'spike' in impairments for builders set to report financial results after wrapping up their fiscal years at the end of December, 'due to the added rigor of year-end accounting reviews and the desire to minimize next year's fiscal write-offs,' Sood added."
Labels: Construction Industry, Construction News
