Since 95% of homes sold are resale, builders target "new vs. used"

Source: Calculated Risk

Calculated Risk's Bill McBride updates his "distressing gap"--the comparison of existing home sales to new-home sales--on a monthly basis. The tidal wave of distressed sales has thrown off the normal ratios, even during a downturn, and now, there are 15-plus resale homes sold for each new home. Increasingly, builders are setting their competitive sights not on one another so much as the pool of resales that are transacting that are not distressed. Meritage Homes, for instance, is pricing its high-energy efficiency new home product in the Phoenix market at the same square foot price as existing home comps in their respective submarkets. It takes a while to move the needle, but that's where they believe their incremental volume will come from.

• From the Richmond Fed: Manufacturing Activity Stalled in May; But Expectations Remain Upbeat


In May, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell sixteen points to −6 from April's reading of 10. Among the index's components, shipments decreased nineteen points to −13, new orders dropped twenty-five points to finish at −15
...
The pace of hiring held steady at District plants in May. The manufacturing employment index was unchanged at 14 and the average workweek measure flattened, losing seven points to 0. However, wage growth slowed sharply, falling sixteen points to 6.
This was the first regional manufacturing survey to show contraction - the others showed sharply slower growth in May.

Also the Richmond Fed service survey indicated slowing: Service Sector Activity Slowed in May; Hiring and Wages Remained Strong at Non-Retail Firms, and Leveled off at Retail Businesses (This is new and not closely followed).

URL to original article: http://www.builderonline.com/builder-pulse/since-95--of-homes-sold-are-resale--builders-target--new-vs--used-.aspx?cid=NWBD110525002

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