Sorry, Housing Isn't Bottoming Yet

I am looking for some sign of a bottom in home building...but I don't see it.

Home builders are up again today, because Lennar beat estimates. Don't kid yourself: new orders still decreased 5 percent; the bottom line is that across the board — and I mean all the builders — orders have been lousy since the tax cut expired in July.

I wanna believe, I really do. But the evidence isn't there. John Burns, one of the most respected housing consultants in the business, noted in a recent building survey that net home sales were worse than normal for December. "Deeper price cuts and special incentives ultimately drove year-end sales for some larger builders with standing inventory to move," Burns noted.

And what about higher interest rates? Not the culprit: "Increased mortgage rates in December had limited impact on sales," Burns noted.

Other comments from Burns:

1) "Traffic remains poor in both numbers and motivation." In other words, demand is still not picking up appreciably.

2) And builders are responding to that lack of enthusiasm: "New home prices net of incentives are falling everywhere."

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