February 6, 2007

Builders Look for Housing To Recover in 2007

Builders Look for Housing To Recover in 2007

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Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown, but cancellation rates should steady in the first quarter and taper off later in 2007, according to�the chief executive of one of the nation's largest home builders. � "Cancellations are likely to stabilize and stay level this quarter, and then decrease," said Ara Hovnanian during a Web cast of a real estate conference sponsored by Deutsche Bank in New York, adding cancellations should get back to "normalcy in a quarter or two." �

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The Hovnanian CEO said many cancellations are for older contracts signed when the market was booming and home prices were rising. He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table. � "We don't like to do it, but it can prevent cancellations," Hovnanian said.

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Home builders have been reporting surging cancellation rates driven higher by sagging consumer confidence and difficulty in selling existing homes. �

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