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Homebuilders Ryland [RYL
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] and Pulte [PHM
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] are reporting tomorrow. Don't expect much. There will continue to be significant pricing pressure & writedowns.
Learn More with CNBC: |
Here's the key for the homebuilders. They need to:
-reduce inventory to generate cash
-raise capital
Capital raising is likely, because they are not generating enough cash flow to fund their public debt that is coming due.
Trade with CNBC's Experts: |
Expect more builders to default on their loans, so banks will own more real estate assets, which they will sell at a deep discount.
Already, builders with February quarter ends -- KB Home [KBH
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] and Lennar [LEN
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] -- reported dramatic declines in sales. At UBS, they are expecting new home prices to decline an additional 10-15%, or ~35% cumulatively in the hottest housing markets.
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