WTHR |Homebuilder CP Morgan going out of business

Homebuilder CP Morgan going out of business

Chris Proffitt/Eyewitness News

Carmel - New home sales in the United States have tumbled to their lowest levels since 1963, and an Indianapolis home builder says it has to go out of business.

Ranked as one of the nation's 30 largest homebuilders, Carmel-based CP Morgan announced that the company will close on Friday after 26 years in business. CP Morgan, which tailored its business to first time home buyers, built 25,000 homes in Indianapolis.

CP Morgan was one of Indiana's biggest residential builders with operations stretching to North Carolina.

"Right near the top in terms of homebuilders in Indiana. There was a year not long ago where they built 3,500 homes and that's an incredible number of properties to build in one year. So they're very significant," said Greg Cooper, real estate agent.

Morgan is the third big Indianapolis homebuilder forced out of business since Davis homes closed in July.

Owner Chuck Morgan declined an on-camera interview but said in a statement that the collapse in the real estate market made it impossible to stay in business, adding that he believes the housing crisis will continue to swallow up companies like his across the nation.

CP Morgan employees were told on Thursday that the company was going out of business. With 27 communities in Indiana and 34 in Charlotte, North Carolina, real estate experts say it's likely that Morgan lost its line of credit, forcing the company out of business.

Angelica West and her husband moved into a CP Morgan home in Noblesville in November.

"I'm very disappointed. This is the first time I've heard of it and I'm wondering what's going to happen to our warranty? The value of our house? Is it going to diminish?" West said.

CP Morgan says all homes under construction have been completed and warranties will be honored by a residential warranty company. However, the builder's exit also leaves questions over what becomes of thousands of empty lots and buyers who have put down deposits in neighborhoods left unfinished.

CP Morgan just sponsored the house inside the Indianapolis Home Show.

More on new home sales from The Associated Press:

The news comes on the same day the US Commerce Department reports that new-home sales fell 10.2 percent to a seasonally adjusted annual rate of 309,000, the worst showing on records going back to 1963. It was a weaker showing than the pace of 330,000 that economists expected, and shattered the previous all-time monthly low set in September 1981.

Fallout from the housing crisis is one of the biggest problems facing the country. It has figured prominently into the U.S. recession, now in its second year. Foreclosures have spiked, financial companies have racked up multibillion-dollar losses and home builders have been clobbered.

The Obama administration has unveiled a $75 billion plan to curb foreclosures, which are aggravating problems in the housing market and the overall economy.

With nationwide sales sagging, an inventory barometer also ballooned to a record high. The government said it would take 13.3 months at the current sales pace to exhaust supply. That puts even more downward pressure on prices.

The median sales price fell to $201,100 in January, a record 9.9 percent drop from the previous month. The median price is the midpoint, where half sell for more and half for less. The average home price also dropped to $234,600 last month, a 9.8 percent decline from December.

Foreclosures are especially high in California, Florida, Nevada and Arizona - states that had once led the housing boom, which went bust several years ago.

To lure buyers, President Barack Obama's $787 billion stimulus package includes an $8,000 first-time homebuyer tax credit.

In January, sales fell 5.6 percent in the Midwest. They dropped 6.5 percent in the South and plunged 28 percent in the West. Sales rose 12.5 percent in the Northeast.

In the long run, the reduction in new projects should aid the housing market's recovery as fewer properties for sale help increase competition and stabilize prices. But at the moment, a stable housing market appears months away.

The National Association of Realtors said Wednesday that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month, from 4.74 million in December. It was theweakest showing since July 1997.