Dive Summary:
- Builders may face a problem in continuing the housing recovery if they have to build on lots bought during the boom at such high prices that new homes become unaffordable, economist Paul Diggle says.
- Diggle, with Capital Economics, says builders need to replenish their inventory of building lots at today's prices if they are going to keep the recovery trend on track. He foresees 750,000 housing starts this year and 850,000 in 2013 burning through current land that builders control and can afford to use.
- Builders will acquire land, but the process will slow the pace of the housing recovery from what it could be if more cheap land were available now, Diggle predicts.
From the article:
Builder KB Home's ($15.26 2.15%) third-quarter profit perfectly illustrates the modest recovery taking hold in the homebuilding segment, but economists are not sure how far the recovery will go. ...
