Home Builder Ryland Stumbles; Grows Inventory

The Ryland Group Inc. warned the market that its first quarter would come in below estimates due to the heavy rain in the west. While that is a plausable excuse, the industry is looking a little nervous at these lofty heights.

A look at the recently released 2004 financial statements causes one to question the 225 house shortfall. Since December 31, 2003, Rylands inventory has soared by over $600 million or 44%. Regular readers of this blog know that situation is common to all major builders in the US.

It is the nature of a mania to continue higher in the face of overwhelming evidence to the contrary. The various sectors of the housing bubble should break down one by one. GSEs and mortgage stocks may have already peaked and home builders could be next. Individual home owners will be the last to get the message and then retail prices should follow.