Small Builders Sacked by Slump

July 17, 2007 — -- When it comes to woe in the housing market, there's plenty to go around. Tuesday, the National Association of Home Builders said confidence among its members had dropped to its lowest level in more than 16 years.

"Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers," NAHB chief economist David Seiders said in a press statement.

For the past two years, as home sales have taken a massive dive from their record highs, the big national builders like Lennar, DR Horton, Pulte and Centex seem to be getting all the headlines.

These corporate builders put up hundreds of thousands of homes every year. And because they are publicly traded, they also talk to investors with every quarterly report, pointing to the massive "oversupply" of new homes for sale and talking about billion-dollar write-downs on new communities that won't be built anytime soon.

But small builders -- the folks who build fewer than 25 homes a year -- are a big part of the home-building industry and are suffering through the downturn too.

According to NAHB these smaller players account for more than 80 percent of their membership and build one in four houses in the United States.

Marsha Elliott, president of Terrestris Development Co., is one of those entrepreneurs who built her Chicago-area home-building company during the past 22-years.

"In the last eight to 10 months [the downturn] has really impacted my business's bottom line," Elliot told ABC News. "I did something that I've only done once before, which is when I finished up a community I needed to eliminate two positions from the company payroll."

Elliot's business had been booming. Just two years ago -- at the height of the boom -- she had 36 homes under construction. Today, her company has workers "finishing up just 12 homes."

But despite the drop, Elliot says she's one of the lucky ones.