There may be darkness for homebuilder exchange traded funds (ETFs). According to D.R. Horton (DHI) President Donald Tomnitz, the homebuilding market "is going to suck, all 12 months of the calender year". In addition, his prediction is that new-home prices will continue to decline due to the inventory still on the market. Joanne Von Alroth for Investor’s Business Daily reports that Horton’s own production is down 35% in 2007 from last year, from 40,000 houses to 26,000. DHI makes up nearly 5% of the SPDR S&P Homebuilders (XHB). XHB is down 9% for the year.
Other news in the industry has not been promising, as subprime lender New Century Financial (NEW)announced it didn’t have enough cash to pay creditors. The good news is a rebound should build up over the next few years.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.