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Seven analysts and top management from sixteen sector firms examine the homebuilding industry sector in this special 89-page Homebuilding Industry issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info506.htm

TWST: Sam, as we move into the spring selling season, how would you compare the outlook for the various categories, and the different price levels — single-family, townhouses, multi-family?

Mr. Lieber: I think one need only look at a headline that ran across my Bloomberg terminal today that said that for the first time in 12 years, last quarter home prices declined in Greenwich, Connecticut. That was average home prices, and the volume of transactions also slowed. The relevant point of all this is that the very high end of the market has probably been hit a little more by the so-called wealth effect of a declining stock market over the past two years. On the other hand, many people have actually seen a different sort of wealth effect from home ownership. In fact, individuals throughout the country have been able to refinance their mortgages over the past year and realize some of the appreciation in their homes. It was mentioned earlier that there’s probably smaller supply, as well as smaller demand proportionately, for the million-dollar market, so that may not have affected most of the public builders that target the larger, mid-range of buyers. Entry level has been extremely strong, fueled by rising immigration and continued movement of individuals, such as the Generation Xers, throughout the country, particularly to higher job growth cities and lifestyle-oriented regions in the Sunbelt states. Lower price points have been very strong, so most of the builders are trying to build more product for the entry level. The other meaningful demographic group is the active adult universe. There is a growing representation among different builders trying different products to tap into that particular sector, because the demographics indicate that there will be a swelling population boom with different desires and tastes with regard to types of accommodations.

TWST: Sam, is “active adult” a euphemism for senior living?

Mr. Lieber: It can be for people who may be retired, yet seek physical, cultural or social activities in a community setting. Perhaps they are tired of mowing the lawn or having a large house to maintain. Maybe they prefer a single floor residence, a ranch-type home, as opposed to a multi-level.

TWST: Sam, at the last Roundtable, you highlighted several companies that you considered to be best positioned to handle the transition that has been going on in the industry. They included Lennar (NYSE:LEN), Pulte (NYSE:PHM), KB Home (NYSE:KBH), Crossmann (Nasdaq:CROS), Ryland (NYSE:RYL) and M.D.C. (NYSE:MDC). Are you more or less favorably disposed to these companies today than you were seven months ago?

Mr. Lieber: I’ll echo what Scott said regarding Crossmann. They’re gone, and we enjoyed the ride, so thank you. I think another interesting company will be Hovnanian (NYSE:HOV). Heretofore, it had been a sleepy regional developer that really was not successful growing in other regions. In part, perhaps due to their acquisition of Washington Homes, they seem to have enhanced operations, and along with another recent acquisition, they may be on the road to turning that company into one of the higher flyers, such as the Ryland/Beazer/M.D.C. trio I mentioned earlier. So this one bears watching.

This special issue includes:

1) Homebuilding Industry - In an in-depth (13,500 words) Analyst Roundtable, Scott H. Campbell, Vice President-Homebuilding and REIT Equity Research at Raymond James & Associates, David Jarrett, Vice President at Credit Lyonnais Securities (USA) Inc., Samuel A. Lieber, CEO of Alpine Management & Research, LLC, Joseph Sroka, Vice President at Merrill Lynch & Co., Inc., James Wilson, Managing Director at Jolson Merchant Partners Group, LLC, examine the outlook for the sector including industry consolidation, interest rate outlook and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance of eight sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for Homebuilding Stocks - In an in-depth (5,000 words) Analyst Interview, Carl E. Reichardt, Principal at Banc of America Securities, examines the outlook for the sector including and shares specific stock recommendations.

4) Building Materials Manufacturers - In an in-depth (3,900 words) Analyst Interview, Robert Marshall, Senior Analyst following the housing/building materials sector at Wachovia Securities, examines the outlook for the sector including and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of sixteen sector firms examine the outlook for their firm and the sector.