Builders May See Washington Woes
Updated from 4:53 p.m. EST
The area has been a boomtown for residential real estate over the past few years. But in a research note Wednesday, Raymond James' homebuilder analysts noted that data from the Greater Capital Area Realtors showed that the greater Washington market slumped in November.
"The market appears to be deteriorating at a brisk pace as inventory is up 69% and contracts declined 19% year-over-year during the month," analysts Rick Murray and Paul Puryear wrote. "As we have noted, we suspect `hidden inventory' from speculators may be hitting the market, contributing to the sharp increase seen in recent months."Data from the Realtor group showed that sales contracts in the District of Columbia fell 18.2% year over year in November and dropped 19.2% in Montgomery County, Md., which is in the northwest suburbs of Washington. Listings, meanwhile, rose 58.1% in D.C. and 74.6% in Montgomery County during the same timeframe. Last week, Comstock Homebuilding (CHCI), a small homebuilder that primarily operates in the D.C. area, cut its fourth-quarter guidance and said it plans to expand outside of its core Washington market. The largest builders, measured by 2004 home closings, in the Washington area, are NVR (NVR), Hovnanian and Toll. It will be interesting to see what Hovnanian's management says about the market when it holds its earnings conference call Thursday morning at 11 a.m. EST. In early November, the company announced its orders for the quarter ending Oct. 31, saying it achieved 75% order growth (on a dollar basis) in the greater Washington market. After the market closed Wednesday, Hovnanian reported a 24% rise in fourth-quarter earnings, beating Wall Street's forecast. The company noted that it is seeing a more normalized level of activity in markets such as California, the Northeast, and Washington, D.C. In early November, Toll preannounced its orders for the latest quarter, and the results disappointed investors. The luxury-home seller's quarterly order numbers rose just 1% year-over-year on a unit basis. On the November conference call, Toll Brothers CEO Robert Toll said he was seeing a slowdown in sales in many markets, including Washington D.C., Maryland and Northern Virginia. Toll Brothers reports earnings before the market opens Thursday. On Wednesday, homebuilders slid on a series of negative housing reports. Toll dropped 3.7% to $34.04, Hovnanian fell 3.4% to $48.81 and NVR slid 2.24% to $677.50.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV