Buffett sees signs of stability in US hsg market

Berkshire Hathaway Chairman Warren Buffett said over the weekend that he sees some signs of stabilisation in housing markets. "In the last few months you have seen a real pickup in activity although at much lower prices," Buffett said, citing data from Berkshire's real estate brokerage business. In California, medium and lower priced homes - under US$750,000 - have been selling more, although there has not been a bounce back in sale prices, Buffett explained. "We see something close to stability at these much-reduced prices in the medium to lower part of the market," he said. Roughly 1.3 million households are created each year in the US, while about two million homes were being built a year during the recent boom, Buffett added. At that rate, you will run into trouble, he said. Now housing starts are running at roughly 500,000 units per year, which means the excess inventory is being absorbed at a rate of about 700,000 to 800,000 units a year, Buffett said. "We are going to eat up inventory. That may take a couple of years. When it gets done you will have stabilisation in housing prices," he said. "Then you will have demand for more housing starts."