Home builders back to buying land despite slump

Now that's changing. Lennar Corp, KB Home, Hovnanian Enterprises Inc, Meritage Homes Corp are buying and developing land again -- or at least talking about it -- and analysts have misgivings.

"No one should be buying land just yet," Raymond James analyst Buck Horne said. "They should be building cash until the full extent of the available land supply is revealed."

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Some of the buying is a contractual obligation, said Horne at Raymond James. Lennar recently bought land from a joint venture partner, meaning it might have been executed according to a previous agreement at prices above current levels.

A new twist on land buying is private equity teaming up with builders, said Stephen Emery, a vice president at Mission Capital Advisors, which specializes in loan portfolio sales.