Encouraging News for a Saturday Morning

There are some encouraging words out there this morning about the U.S. economy and homebuilding so naturally we thought we'd share them.

First off is Time Magazine's "The Curious Capitalist" blog, which argues that despite the continuing European debt crisis, the U.S. economy may do better in 2012 than previously expected. The first reason given is housing.

But there is reason to believe that 2012 will be better than 2011, not worse as everyone seem to be predicting just a few months ago. Here's why:

Remember how everyone has said that the economy won't recover until housing recovers. Well, that's true to some extent. And don't expect home prices to rise very much or at all in the next year or so. But the part of the housing market that matters most to the economy - new constructions - does seem to be picking up, and is perhaps primed for more growth. In October, the pace of construction of single family rose 5%. And we may soon amazingly have a shortage of housing because of the fact that building has been so weak for a number of years. Indeed, construction of multi-family homes has been rising for some time.

Blogger Stephen Gandel also points to an improving job picture and an increased feeling of optimism among consumers.

(And while for some reason the photo that went with the article isn't showing up, the caption that does appear makes this a local story for your Chapter blogger: "A sold sign sits in front of homes under construction by developer KB Home in Valencia, California, Oct. 1, 2011.")

More encouraging news comes from the financial Website Motley Fool. In an article titled "Don't Miss This Homebuilder Turnaround," blogger Neha Chamaria takes note of some good news reported by homebuilders D.R. Horton, Beazer and Standard Pacific (the Chapter's Builder of the Year).

Take a look at D.R.'s numbers, and you'll be amazed at how the important metrics are heading north. From a net loss of $8.9 million in the fourth quarter last year, D.R.'s bottom line has turned to black with a profit of $35.7 million.

Homebuilding revenues crossed the billion-dollar mark to reach $1.1 billion, compared to $925.7 million last year, as home closures shot up 16.5% to 4,987 units. Are homebuyers flocking to the market? Higher home orders seem to say so. D.R.'s net orders in value terms rose 13.5% to $927.6 million. A definitely encouraging sign is how peers are also reporting a flow of orders.

Chamaria notes that Beazer's fourth-quarter new home orders surged 33 percent to 1,006 homes from last year, while Stan Pac's third-quarter home orders rose even more, by 38 percent to 764 homes. And finally, Horton's backlogs -- an important indicator of future revenues – were up 17.6 percent in unit terms to 4,854 homes.

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