U.S. homebuilder stocks and exchange traded funds have posted substantial gains after hitting lows late last year. Recent housing data, positive earnings reports and easing unemployment are all supporting the upbeat sentiment.
Investors in the sector closely watch the new home sales reports from the U.S. Commerce Department.Last week’s report was the best reading in over four years, reports Scott Pluschau for ETF Digest. [Housing ETFs Build Gains but Analysts Skeptical]
Recent data on home construction and pending home sales have been positive. The chief executives of some of the nation’s largest homebuilding companies have remarked that they feel the building market has stabilized, reports Columbia Tribune.
“Looking ahead we are growing more optimistic on U.S. housing as the market appears to be at the end of stabilization and is starting to lay the groundwork for a firm recovery.The combination of record-low interest rates and comparatively low home prices has seems to finally be getting buyers to move forward with new purchases,” Valuentum Securities said on Seeking Alpha. [Homebuilder ETFs Rally 3% on Pending Home Sales]
Lennar’s (NYSE: LEN) fourth quarter earnings got the homebuilder sector off to a good start in 2012. Margins were improved and revenue was reported up 11% for the year. The company is the country’s second largest homebuilder by market value.
SPDR S&P Homebuilders (NYSEArca: XHB) and iShares Dow Jones U.S. Home Construction Index Fund (NYSEArca: ITB) have both outperformed since the October market bottom. Overall sentiment within the sector has been positive, and the latest improvements in the U.S. employment situation should support this mood. Any signs of improvement on the employment picture are seen as support for the housing sector. [Are Homebuilder ETFs Signaling Better Times for Housing Market?]
The monthly housing starts reports was one of the weaker data points, indicating that new home construction had fallen 4.1% in December, down from 685,000 home starts in November, reports Wall St. Sector Selector.
SPDR S&P Homebuilders
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.