April 20, 2018

Homebuilders Need More Land, Analysts Say

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Homebuilders Need More Land, Analysts Say

Homebuilders need to “replenish their land inventories” to respond to the projected growth in buyer demand within the next few years, say Moody’s Investor Service analysts. Part of what’s hampering them from doing so: They lack revolving lines of credit due to the housing downturn and applying for more credit has been a challenge in recent years. 

“During the housing bubble, many builders bought remaining lots of land to build new homes,” HousingWire reports. “This has resulted in a scenario where companies cannot sell the lots with homes priced at values comparable to estimates set when the lots were first acquired.” 

Homebuilders are continuing to dig their way out of a slump and into recovery-mode recently. For example, PulteGroup recently reported its highest third quarter earnings since 2006 and increasing its land spend by $90 million to $1 billion, HousingWire reports. 

Source: “Homebuilders Need More Land as Housing Recovery Continues,” HousingWire (Oct. 26, 2012)