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Number of Homebuilder Firms Dropping
Dramatic Decline In Five-Year Period

The number of companies that build new homes fell by more than 50 percent from 2007 to 2012, the National Association of Homes Builders said after analyzing U.S. Census Bureau data.

The number of U.S. homebuilders declined dramatically between 2007 and 2012, the National Association of Home Builders said.

In a study of Census Bureau data, the NAHB found that the number of companies whose primary business is new residential construction fell to 48,557 in 2012, from 98,067 in 2007. That is a drop of more than 50 percent.

The Census Bureau counts the number of businesses in the U.S. every five years, and releases the data through what it calls an Economic Census, with the most recent one completed in 2012.

"The latest tally is the lowest number of builders reported by the Economic Census since 1997, the first time builders were reported separately from remodelers," the NAHB said. Single-family and multifamily builder membership fell to 26,421 in 2012, from 57,095 in 2007, the NAHB said, a drop of 54 percent. Membership in the NAHB has also declined 54 percent during this five-year period.

The Economic Census breaks down builders into three categories: Single-family general contractors; multifamily general contractors; and for-sale builders, or businesses that primarily construct new homes on land that is owned or controlled by the builder rather than the homebuyer or investor. The land is included with the sale of the home. These types of businesses build single and/or multifamily residences.

A graph on the NAHB website (the link is below) shows all three types of builders saw their numbers decline from 2007 to 2012.

The for-sale building sector dropped 54 percent. Single-family general contractors fell by 49 percent, and multifamily general contractors decreased by 40 percent. NAHB's losses were 68 percent, 45 percent and 52 percent, respectively.

"One plausible explanation for why spec builders (for-sale builders) suffered the heaviest losses is that the housing recession caught them with significant land inventory positions they were unable to unload profitably, and as a result, went out of business," the NAHB said.

Nationwide Home Prices Continue Rising Home prices rose nearly 7 percent in August, compared to the same month the year before, and by a more modest 1.2 percent on a month-to-month basis.

Those figures are among the data included in the Home Price Index, compiled by CoreLogic, which calls itself a leading property information, analytics and data-enabled services provider.

CoreLogic's HPI shows home prices nationwide, including distressed sales, increased 6.9 percent from August 2014.

The firm also compiles the HPI Forecast, and predicts home prices will rise by 4.3 percent from August 2015 to August 2016. CoreLogic says home prices will remain stable from August to September of this year.

"Economic forecasts generally project higher mortgage rates and more single-family housing starts for 2016," Frank Nothaft, chief economist for CoreLogic, said. "These forces should dampen demand and augment supply, leading to a moderation in home price growth."

Home price appreciation in New York, Los Angeles, Dallas, Atlanta and San Francisco remains very strong, one of the reasons prices are moving ever higher, Anand Nallathambi, president and CEO of CoreLogic, said.

"Continued gains in employment, wage growth and historically low mortgage rates are bolstering home sales and home price gains," Nallathambi said. "In addition, an increasing number of major metropolitan areas are experiencing ever-more severe shortfalls in affordable housing due to supply constraints and higher rental costs. These factors will likely support continued home price appreciation in 2016 and possibly beyond."

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July 17, 2019, 8:33 pm PDT

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