LOS ANGELES (AP) — Fresh off a quarter punctuated by a loss and weaker home orders and closings, homebuilder D.R. Horton Inc. said Thursday it expects 2011 will be a tougher slog for housing than last year.
And that's saying something: Last year, builders sold the fewest homes on records going back 47 years.
"We need job growth, we need consumer confidence and we still have issues with qualifying people with tighter mortgage underwriting," said Donald Tomnitz, the builder's president and chief executive. "Our goal still is to be profitable in 2011 and we are going to struggle more than we did in 2010 to be profitable."
High unemployment, tighter bank lending standards and uncertainty about home prices have kept many potential homebuyers on the sidelines even as mortgage interest rates hover near all-time lows. Low mortgage rates have made homes more affordable than they have been in years, but that's little consolation to would-be homebuyers who are worried about their job security or unable to sell their own home.
And yet Horton is seeing some signs that business might at least perk up this spring, traditionally a period of strong home sales. Traffic from prospective buyers is up at the company's model homes, Tomnitz said.
"In two weeks the spring selling season begins in earnest and we will begin to get a much better read on demand," he said.
To gear up for the spring, Horton has been tying up option contracts on land even outside its core markets.
But Tomnitz warned that the builder's profit margins would continue to be squeezed in the second quarter due to intense competition among builders for a smaller pool of potential homebuyers.
"Over the next couple of months there's going to be some extreme competition in the marketplace," he said.
That could mean better deals for homebuyers, but lower profits for Horton and other builders.
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