This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Builders Bump Up Thanks to Drop in Existing Home Supply




By Diana Olick, CNBC Correspondent

NEW YORK ( CNBC) -- Sales of existing homes are recovering slowly, but a drop in supplies of those homes is pushing confidence among the new home builders to a six year high.

There are just 2.1 million existing homes for sale, which is a 22% drop from a year ago, according to the National Association of Realtors (NAR). Much of this is due to a drop in foreclosed and distressed homes, as lenders try to modify troubled loans more aggressively.

"In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today's favorable prices and interest rates," wrote Berry Rutenberg, chairman of the National Association of Home Builders in a release Monday.

That pushed home builder sentiment up 5 points in November on the NAHB's monthly survey. It now stands at 46, just 4 points shy of the line between positive and negative sentiment. Last year sentiment was around 19. The component of the index gauging current sales jumped 8 points, and sales expectations jumped 2 points, the only component now in the positive range. Again, much of that is due to a lower overall supply of homes on the market, as distressed homes fell to 24% of all sales, down from nearly 40% at the worst of the housing crash.

More from CNBC
Why Chrysler's Makeover Is Far From Finished
Best Buy Deja Vu? Website Crashes as Shoppers Ramp Up
Tell the Truth: You Still Wanna Be an Astronaut!

The nation's five largest banks report that since March 1 of this year they have extended more than $26 billion in mortgage relief to more than 300,000 borrowers. $6.339 billion of that is in the form of principal reduction on first or second liens. All of this is in accordance with the National Mortgage Settlement signed this year by those banks with 49 state attorneys general and federal agencies over so-called "robo-signing" fraud.

While lenders are also pushing foreclosures that cannot be saved through the system more quickly, there is a ready cadre of investors waiting to buy. Investors made up 20% of buyers in October, according to the NAR. Since investors largely use cash, regular owner-occupants who largely need to use mortgages, can't compete. 29% of existing home buyers used all-cash.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs