S&P: Homebuilders Face Inventory Challenge

Homebuilders need to take "a disciplined approach" to managing inventory assets to weather the storms in the housing market, according to Standard & Poor's Equity Research. Homebuilders who have "wisely managed" their land acquisitions, maintained ample liquidity, and "leveraged their operating scale advantages" will be in the best position, S&P said in a new report titled "U.S. Homebuilder Industry Shaken by Asset Impairments." Ken Leon, an S&P homebuilder analyst, said price declines and decreased orders and deliveries have affected the value of homebuilders' inventory. "While 2007 saw a very high level of writedowns, particularly in the third quarter, we believe the overall trend among homebuilders could continue at a heightened pace and be more widespread," Mr. Leon said. The company can be found online at http://www.equityresearch.standardandpoors.com.