Builders Cautiously Hopeful That Market Is Turning Corner

Home builders are beginning to be cautiously optimistic that the worst may finally be over. Sales for production builder KB Homes has increased 26 percent in the first quarter, the company reports. It was the firm’s first year-over-year increase in more than three years. First-time home buyers purchased 70 percent of the homes. They represent ''the most attractive segment of the market as they do not have to sell a home before purchasing,'' says CEO Jeffrey T. Mezger.

Another bright spot, is the fact that these large publicly-traded companies continue to be protected – at least partially – by tax refunds. K.B. Homes will get a $220 million tax refund this year. D.R. Horton expects a $667 million refund. This is the third year that tax refunds have cushioned home builders from losses, but this is the last time these companies will have previous gains to offset.

If prices don’t start to rise soon for both new and used homes, times will get even tougher for both production builders and independents alike.