Tags: Warren Buffett | housing | recovery | slower

Buffett: Housing Recovery 'Slower Than I Anticipated'

By    |   Friday, 02 May 2014 12:19 PM

The housing market has been in rebound mode since early 2012, but gains have tailed off in recent months, surprising legendary investor Warren Buffett, CEO of Berkshire Hathaway.

"The pickup in housing has been slower than I would have anticipated," he tells CNBC. "If you look at transactions and pending transactions in March, it's not booming."

New home sales plunged 14.5 percent in March, and existing home sales dipped 0.2 percent. Meanwhile, the pending home sales index stood 7.4 percent below a year earlier.

Nobel laureate economist Robert Shiller isn't quite sure what to make of the housing market at this point. "Our indexes [the S&P/Case-Shiller home price indices] are basically flat right now," he tells ETF.com.

"It's seasonal weakness. If you correct for seasonality, it looks like they [home prices] are still going up. But other indicators are showing signs of weakness, so I'm conflicted."

Report: Buffett Made 96% of His Wealth After 60

The S&P/Case-Shiller index for 20 cities showed that home prices rose a seasonally adjusted 0.8 percent in February, while unadjusted prices were unchanged.

When it comes to the economy, Buffett says the meager 0.1 percent growth rate for the first quarter didn't surprise him.

"We saw in January and February things fairly slow, which certainly in some cases was attributable to weather, in our own case," Buffett explains.

"Others may not have been. But it's gotten stronger since then. If you have two months out of the three where things really seem to be pretty stagnant, the three months aren't going to be that good."

Buffett believes the economy now seems "more like it was going into the end of the year." GDP expanded 2.6 percent in the fourth quarter.

As for jobs, "most of our companies are hiring, but not all of them," he notes. "It just depends on the industry. It's more or less the same pace that I've been seeing since the fall of 2009."

He spoke Thursday, before Friday morning's release of April employment data.

Meanwhile, Buffett thinks Coca-Cola will heed shareholder objections to its stock compensation plan for executives, which includes 340 million new shares and options for the next four years.

Buffett abstained in last week's shareholder vote on the plan, but he called it "excessive." He has repeatedly voiced his dislike of sticking significant numbers of options into compensation packages. The options amount to "lottery tickets" for executives that frequently produce excessive windfalls, he says.

Knowledgeable sources tell The Wall Street Journal that Coke is likely to reform the plan in response to Buffett's pressure.

"They can spread it over a longer period of time, and we'll see what they do. But they've listened to shareholders before, and I think they'll listen again," Buffett tells CNBC.

Report: Buffett Made 96% of His Wealth After 60

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Economy
The housing market has been in rebound mode since early 2012, but gains have tailed off in recent months, surprising legendary investor Warren Buffett, CEO of Berkshire Hathaway.
Warren Buffett, housing, recovery, slower
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2014-19-02
Friday, 02 May 2014 12:19 PM
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