- The Washington Times - Friday, June 12, 2009

The media devote a lot of time to the plight of American car builders — and there is nothing wrong with that. However, what about the homebuilders?

The National Association of Home Builders (NAHB) has more than 200,000 members. However, not all builders are members of NAHB. Associated Builders and Contractors Inc. represents 25,000 firms, many of which are homebuilders. Between them, they employ a lot of people, and they are struggling just like the autoworkers.

Homebuilders are not having a good year. During the first quarter, new-home sales in the Washington region were down 9 percent compared to last year. That may not sound bad, but this is a bad year following several bad years.

To download a PDF of the chart, click here.

For example, consider Fairfax County - the region’s largest jurisdiction. How many new homes do you think were sold there in March? Would you believe 35? In a county with about 1 million people, just 35 new homes sold in March. Just four years ago, in March 2005, 426 new homes were sold there.

When your sales fall that precipitously, it hurts. Builders are trying to compete by dropping prices, as the adjacent charts show. With foreclosures and short sales dragging down the prices of existing homes, builders face stiff competition.

Sales haven’t fallen in every county the way they have in Fairfax, where sales have fallen 90 percent since 2005. Sales in Montgomery County have fallen 45 percent in the past four years. New-home sales in Prince George’s County have fallen 32 percent since 2005.

Sadly, we probably have to wait for sales of existing homes to stabilize before builders can see much improvement. Many buyers are driven by price, and foreclosure properties are powerful attractions that are garnering a lot of the market’s attention.

Contact Chris Sicks by e-mail ([email protected]).

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