According to star housing expert Ivy Zelman, the drop in homebuilding sentiment is a signal that the housing downturn is just beginning. According to a report Monday by the National Association of Home Builders, builder sentiment fell 12 points to 55 points in July. The drop brought the index to its lowest level since the beginning of the pandemic. “The rate of change is pretty impressive, and I think we’re just in the early days,” Zelman said Monday on CNBC’s “The End Bells.” The housing market downturn began in May and continued through July, although its impact in some areas was more severe than others, Zelman & Associates CEO Zelman & Associates . As this trend continues, home prices will have to keep falling, she said. Because this trend is set to continue, now is not the time to buy home construction stocks, even if they look like they are trading at a relative discount. So far, the S&P 500 real estate sector is down nearly 22%, but could fall further. “I think we haven’t seen enough pain yet – I don’t think it’s time to start accumulating here in homebuilding shares,” Zelman said. “I think we’ve got more surrender to get results.” The high-inflationary environment the United States is dealing with will continue to put further pressure on housing stockpiles, as the Federal Reserve’s rate hikes push up mortgages and dampen demand due to inventories. stock is increasing. “Those stocks don’t work as the Fed raises rates, and we know that the inflationary pressures we’re feeling aren’t going to go away anytime soon,” she said. Zelman expects the overall housing downturn to last at least through 2023 or 2024 and thinks both new and existing home prices will fall. “This could be a correction that lasts one to two years, if not longer, depending on the economy,” she said. That will lead to a better chance of picking up. Of course, some homebuilders have been on the rise in recent weeks – Cavco Industries, for example, is up more than 18 percent month-on-month, while MDC Holdings is up more than 25 percent. Zelman saw this as an opportunity to sell before they took profits. “I’ll take a profit and sell that power,” she said.
