(Read more: Map: Tracking the recovery)

While inventories improved slightly in August on a national basis, up 0.4 percent month-to-month, they are still down 6.3 percent from a year ago, according to the National Association of Realtors.

While home sales were higher in August, the Realtors said it was, “the last hurrah,” as several indicators showed buyer traffic slowed dramatically at the end of the summer.

“The sharpest falloff in the HousingPulse Homebuyer Traffic Indexes was seen among current homeowners, the largest group of home purchasers in this year’s housing market. The first-time homebuyer group also saw a decline in its traffic index,” according to a new report from Campbell/Inside Mortgage Finance.

The fall and winter months are traditionally the slowest in the housing business, and weaker demand will affect prices. Sales of newly built homes have not exactly been gangbusters, and new orders at both Lennar and KB Home were weaker than expected. Make no mistake, underlying demand exists, it’s just a question of when it emerges in force.

So far, even weak demand has pushed prices higher, again, due to historically low supply.

(Read more: Real estate’s new frontier: Crowdfunding)

“Construction of single-family homes has been depressed since late 2007, while the U.S. population has increased by more than 12 million over that time,” said economist Patrick Newport of IHS Global Insight. “Since underlying demand is, by our estimate, running at a rate nearly twice that of housing completions, the shortages are likely to get larger before getting smaller.”

This means that home-price gains, as measured by the Case-Shiller indexes, are likely to remain strong for some time, even if they retreat some from the current pace.”

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC.

Article source: http://www.cnbc.com/id/101058777

There were just over 200,000 multi-family housing starts in 2012, according to the U.S. Commerce Department, far lower than the annual average of 340,000 over the past decade.

“We are still woefully short of what’s going to be coming in terms of demand,” says Buck Horne, a housing analyst at Raymond James. “Lennar is going where the demand is going to be. They’re going where they know they can make money.”

Lennar has positioned itself with offices in Atlanta, Charlotte, Chicago, Dallas, Denver, Miami, Orange County, San Francisco and Seattle, all markets where apartment demand is high, despite a recovery in the housing market.

“You’ve got to be very selective about your locations,” warns Miller. “We stay pretty thoughtful about where there are imbalances and too much building going on. This is not a market where you can start building any place.”

Miller is not concerned with competition from investors in the single family rental market, again focusing on location as his leg up. A lot of the foreclosed properties being absorbed by hedge funds and the like are not concentrated in the top markets targeted by Lennar. They are either inner city or third-level suburban, according to Miller.

Expanding household formations, coupled with credit and down payment-challenged new home buyers will benefit the rental sector for the foreseeable future. Many renters will eventually move to home buying, especially as their families expand. For Lennar, getting those potential buyers into a Lennar rental can only benefit the builder in the future.

“In many instances, the very first introduction to housing is through rentals and through branding and knowing consumers. Being there gives us a leg up and advantage in terms of new home sales later,” says Miller.

Article source: http://www.cnbc.com/id/100407898

(Read More: New Housing Fears: Home Prices Rising Too Fast?)

The PHLX index closed at an all-time high on July 18, 2005. It then dropped a staggering 81 percent to a trough in March of 2009. It has made a remarkable comeback in just the past year and a half but is still 34 percent below that peak in 2005. Only one component of the index, Texas-based Lennox International, a provider of climate control solutions for heating, air conditioning and refrigeration markets, is above its 2005 peak.

The overall quick pick-up in the home builders has some calling the stocks overvalued. They did, in fact, take a pause last fall, as some analysts downgraded various builders as being too hot for the fundamentals. Then come December, they began climbing again.

“Just because the stocks are overvalued doesn’t mean they are not going to go up more,” says David Goldberg, a housing analyst at UBS. “It’s a momentum play.”

(Read More: Foreclosure Fixer-Uppers Help Boost Remodeling)

Goldberg warns, however, that there is a lot of growth baked into these stock valuations for 2013, expectations that may be tough to meet. Big builders like Lennar and DR Horton continue to report growth in new orders, but in their latest reports that growth didn’t meet expectations, and the stocks responded accordingly.

“If you’re betting on a deeply sloping line that keeps going up, you get very sensitive to slowing growth rates,” notes Goldberg.

Expectations for housing starts and new home sales are both in the 20 percent range for 2013. Granted they are both coming off very small volumes historically, but those are still big expectations to meet. They very well could exceed those expectations, given the sheer optimism in the housing market today, but investors going in should still pay attention to fundamentals and to diminishing, but still-existing, headwinds.

(Read More: Shiller: Housing Malaise Could Resemble Japan’s Lost Decade)

Article source: http://www.cnbc.com/id/100405275

Last week the CEO’s of 18 home building companies, who collectively build 30 percent of the nation’s new homes, sent a letter to President Barack Obama and House Speaker John Boehner urging them to avoid the fiscal cliff, even if it means raising taxes on the builders:

“We support a comprehensive agreement in Washington to avoid the fiscal cliff that includes revenue increases (including tax rate adjustments) together with meaningful entitlement reforms. We believe that a properly balanced agreement will breed confidence in the political system and the U.S. economy, will enable the housing market to continue its recovery, and, in turn, will promote broader economic growth.”

The letter was signed by the CEOs of publicly traded builders including Beazer Homes, Hovananian Enterprises, KBHome, Lennar, MDC, and Meritage.

(Read More: Best US Housing Markets for Buyers and Sellers)

Article source: http://www.cnbc.com/id/100324311