Builders Suffer Due To Mortgage Crisis

Builders Suffer Due To Mortgage Crisis



Builders Suffer due to​ Mortgage Crisis
During last month the​ existing home sales fell down again and it​ is​ reported that a​ large number of​ homebuilders are facing the​ worst ever quarterly earning .​
These homebuilders believe that the​ main reason behind this mess in​ the​ stressed housing sector is​ the​ continuous sub prime mortgage crisis.
The National Association of​ Realtors mentioned that during the​ month of​ August it​ was noted that the​ purchases of​ the​ previously owned homes fell down by 4.3 percent from what is​ was in​ the​ month of​ July,​ i.e .​
sending sales slipping to​ five years low .​
In the​ month of​ July,​ the​ annual sales rate was 5.75 million that dropped down to​ 5.50 million .​
Statistic says that the​ existing home sales have fallen almost 13 percent over the​ period of​ last 12 months.
On the​ other hand,​ the​ Lennar Corporation declared their biggest quarterly loss in​ its history after it​ wrote down $848 million in​ the​ value of​ real estate .​
The company's net loss was $513.9 million,​ or​ we can say $3.25 per share,​ compared to​ the​ profit of​ $206.7 million,​ or​ $1.30 per share,​ during the​ same time of​ the​ previous year .​
The shares of​ Lennar Corporation were down by 4 percent in​ midday trading,​ at​ $23.20.
The shocking news in​ the​ housing sector was joined with a​ disappointing report on​ customer confidence from the​ Conference Board,​ whose index dropped down to​ 99.8 during September from 105.6 in​ the​ month of​ August .​
This fall was much more than what was forecasted .​
Its index is​ now at​ its lowest level in​ the​ past two years .​
a​ group of​ analyst believes that the​ reason behind the​ concern among the​ consumers is​ the​ weak job market and stagnant salary that has probably created declines in​ the​ consumer spending and job creation during the​ period of​ coming months.
Joshua Shapiro,​ the​ chief United States economist of​ a​ New York research firm believes that fall in​ the​ housing sector is​ just because of​ the​ negative environment over the​ residential real estate,​ affects and creates the​ changes in​ the​ consumer's attitude and consumer's spending ability.
Lennar has reported a​ drop of​ 44 percent in​ its revenue during the​ last quarter and has reduced 35 percent of​ its work force .​
It turned out to​ be another sufferer of​ the​ high inventory levels and credit market disorder that have created many troubles for the​ home builders in​ the​ period of​ last few months .​
The company's chief executive,​ Stuart Miller,​ said in​ a​ statement today that due to​ the​ continuous decline of​ our net margin and for that reason,​ higher injuries to​ our inventory .​
He also added that the​ staff reductions were in​ store for the​ fourth quarter.
On the​ other hand the​ Darlene Williams,​ assistant secretary of​ US Housing and Urban Development hopes that even though the​ current crisis in​ the​ credit market the​ sub prime mortgages must stay as​ they play a​ very important role in​ increasing home ownership in​ United States .​
She hoped that the​ US congress would pass Federal Housing Administration,​ reforms to​ expand federal backing of​ mortgages.




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