Mr. Stevenson: I think that the Pulte (PHM) management, by way of their merger with Centex (CTX), would have you believing that. Today, I'm not so sure. I think that there is still some downside here to come. I take a look at the supply (you had foreclosure holidays going on in November, December and parts of January) and the demand (3 million plus jobs that have been shed over the last five months) and see a housing market that's likely to get more supply rather than less in the near term. This is likely to again put more pressure on pricing. So while we may be closer to the bottom than we were six months ago, I still think that it's a little too early to be calling the bottom in housing.
TWST: You mentioned more supply in the housing market. Is that coming just from
foreclosures?
Mr. Stevenson: No, although that is a big piece of it. When I take a look at the
amount of people who have lost their jobs coupled with massive home price
declines, I see a difficult refinancing market, despite historically low
mortgage rates. This will force more people to sell, dumping even more supply on
the market and putting even more downward pressure on pricing. Coupled with the
foreclosures, it's a vicious cycle.
Tickers included in this excerpt: CTX, KBH, MDC, NVR, PHM, TOL
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