McGraw-Hill Construction and Deloitte & Touche USA's Homebuilding Survey Shows Regional Slowdown of Housing Market More Probable Than Recession

Study Also Finds that Land is Most Important Commodity to the Success of Homebuilders

New York, NY -January 11, 2006 -- McGraw-Hill Construction and Deloitte & Touche USA LLP's real estate industry group issued a new report today suggesting that a "moderate slowdown in certain regions of the U.S. housing market" appears more probable than a "deep-seated recession." The report, "Staying Competitive in Today's Homebuilding Industry," surveyed U.S. homebuilders and highlights the dynamics and challenges that large and small residential construction companies face.

The report also found that land is the most important commodity to the success of a homebuilder, and children of Baby Boomers and immigrants are expected to lead overall growth in households over the next decade.

"The goal of any homebuilder, be they large or small, is to create economic value," said Paul Prescott, a principal with Deloitte Tax LLP and leader of Deloitte & Touche USA's homebuilding industry group. "Commanding prices that are greater than the full costs of producing homes is only part of the value equation- the larger part, especially for public builders, is achieving superiority in long-term return on investment."

The study underscores fundamental shifts that will lead to industry change:
    • Land is increasingly scarce in desirable markets.
    • National and regional procurement is increasing, which means large
      homebuilders are reaping the benefits and gaining capital advantage.
    • Consolidation will continue.

In all aspects of the study, land was shown to be a critical commodity. It could create the largest roadblocks (supply and development delays), the most significant cost, and have the most important impact on profitability.

"This survey report is valuable as in strategic planning because it outlines the major factors related to marketplace shifts as well as provides information on trends and insights into what the industry is thinking," states Harvey M. Bernstein, Vice President of Industry Analytics and Alliances for McGraw-Hill Construction.

Some of those trends include the fact that the fastest growing trend areas are high-end kitchen materials, tile flooring, and wood flooring. It also reports that most homebuilders find most of their trend information through trade literature.

Ninety-seven percent of the survey participants were homebuilders or lot developers; 94 percent were privately owned companies, 34 percent had annual revenues greater than $100 million; 63 percent build move-up homes, and 29 percent build more than 250 homes per year.

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About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu," or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.

Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu. In the U.S., services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP.