Could the Builders Begin to Topple?

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We've known for a while that the homebuilding group has suffered more than many other sectors of the ailing economy. But could the dreaded "B" word currently being bandied about regarding Ford (NYSE: F) and General Motors (NYSE: GM) end up coming to roost on the roofs of some of our big builders?

In a recent look at our nation's bleak housing picture, I showed you a table that listed many of the key metrics you might use in judging when a turn in the group begins. I did that partly to save you from the day-after-day deluge of reports on all manner of different measures of housing's health.

But I'd just sent the table your way when a new pair of metrics emerged -- metrics that are so negative that I'm forced to begin considering whether all of the major builders will make it through the current turmoil.

Survival of the fittest
What has me thinking that way? For starters (no pun intended), the Commerce Department told us Wednesday that house starts had fallen to an annual rate of 791,000 units nationwide, the lowest level since records began to be kept back in early 1959.

Further, there are predictions that the number could fall to 650,000 units by next summer. That'd help to reduce our glut of houses on the market, but it could have several big builders hanging on by their fingernails.

In fact, some may already be in that precarious position, given their own view of the markets they serve. On Tuesday, the National Association of Home Builders reported that the index of builders' sentiment tumbled to a record low of 9, down from 14 last month. Keep in mind that the index would need to climb to 50 for the builders to be at a glass-half-full status.

For now, I won't try to predict which builders, if any, might not be with us a year or two from now. But take a look at the cash and debt positions of five big builders, along with their EBITDA over the past 12 months. That'll give you a more complete look at which members of the group might be the most resilient:

	Cash	Debt	EBITDA
Centex (NYSE: CTX)	$1,260	$3,400	$(878)
Lennar (NYSE: LEN)	$857	$2,530	$(159)
Pulte (NYSE: PHM)	$1,170	$3,500	$416
Ryland (NYSE: RYL)	$345	$784	$182
Toll Brothers (NYSE: TOL)	$1,500	$2,260	$390

Source: Yahoo! Finance. All figures in millions.

So my counsel to Fools who might still be inclined to search for a housing bottom is simply this: Don't. That bottom is being pushed steadily farther away. Your investment shekels deserve better treatment.

For related Foolishness:

• Housing's Health Meter Is Near Empty
• The Next Housing Catastrophe Waiting to Strike
• Can Toll Lead the Housing Recovery?