Home builders face off with foreclosures on Home Services

Jun

Home builders face off with foreclosures

posted by admin in Home Health Services

U.S. home builders, struggling under sinking demand and a credit crisis, now face a fresh obstacle: competition from a flood of homes in foreclosure.

Grappling with the worst U.S. housing market downturn since the Great Depression, home builders have curbed their building activities. They’ve also been slicing through their inventories of unsold homes by slashing prices even at the expense of profits, all to pay off their own debt and keep afloat.

Now, in addition to higher mortgage rates, skittish buyers and competition from other builders, they face a rising number of homes whose owners are unable to sustain their mortgage payments.

“In some regions, the supply coming to the market from home builders is now smaller than the supply coming from foreclosures,” Deutsche Bank senior economist Torsten Slok said.

The situation in the housing market remains gloomy, and the home builders seem to be waiting for the foreclosure “tsunami” to pass, Slok said.

But many say it may get worse as delinquency risk is likely to rise over the next 18 months, according to First American CoreLogic, which tracks and analyzes real estate data.

The rate of mortgages with payments more than 90 days late rose to 4 percent of all U.S. residential mortgages in April, up from 2.1 percent last year, according to First American CoreLogic.