Home builders, particularly CCS have sold off as at least one analyst, Zelman, noted that new orders are down. He is right about that but wrong about the reason. Orders are down, not because of lower demand, but because most builders have taken to limiting sales. They are drowning in demand and cannot keep up. So, they will release only a limited number of lots per week in each community. With that they are taking sealed bids from interested buyers. The highest bidders get their houses. Many are also looking to rebuild their spec inventory, not making those available until they are framed up and they have a better handle on costs.
As for costs, lumber prices have been in retreat lately. Lumber futures have dropped from $1700/mbf a month or so ago to just under $1000 today.
LEN, a giant in the industry, releases earnings tomorrow. I expect a good beat and a healthy bullish outlook from them. If so, this could well get the builders back in rally mode.
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