NEW YORK (Reuters) - Hovnanian Enterprises Inc’s (HOV.N) chief executive said on Thursday he sees a challenging U.S. housing market for the next two years, but weak demand should bottom out at the end of this year.
“If the Fed continues with their rate reductions, I think we’re going to see a change toward the tail end of ‘08,” CEO Ara Hovnanian said at the Reuters Housing Summit in New York.
“I think ‘09 will still be a challenging year,” he added. “The end of ‘08, personally, will be the bottom and the turning point.”
For the company, the crucial spring selling season has been “so far so good,” Hovnanian said, “We had a small promotion in the northeastern area that went exceptionally well.”
The industry’s spring selling season typically starts after the National Football League’s Super Bowl championship game in early February and runs until the beginning of April.
Meanwhile, most home builders have been posting quarterly losses and have renegotiated credit agreement with their lenders to keep their operations going.
Ara Hovnanian said an agreement with his company’s lenders will “probably be done” by the time a waiver expires March 14.
The head of the Red Bank, New Jersey-based home builder said he sees U.S. home prices stabilizing in the first half of this year and that prices likely remain constant for a “couple of quarters.”
He said sales will sharply rebound once the excess inventory of new homes is sold.
At the end of 2007, the supply of new homes for sale stood at 9.6 months, according to the U.S. Commerce Department, more than double what is considered a healthy supply.