BluefoxToday blog : October 2007

Home builder stocks rally

Most of the housing market reports that you see in the news still come out on the down side. Generally speaking they are. Resales continue to be soft with MLS inventories hovering at high altitudes and builders are struggling with unsold homes and have cut back production. As an exception, a few areas are relatively stable or even on the upswing.

When you experience weakness in the numbers, you don't buy stock in that industry, right? Typically that's the way it is. However, in the last couple of days investors have decided it's a good time to purchase home builder paper. Their prices have been dragged way down this year due to the depressed market conditions and the difficulties the residential mortgage sector is going through. So they are pretty cheap now, ripe for the taking.

But you don't buy stock just because it's low. Another reason you'd embrace it is because you believe that the industry has solid basic fundamentals in place and is about to stage a nice recovery. And that's what the investors are evidently seeing and feeling. Large-cap builders with strong balance sheets like Pulte, Centex, Lennar and D.R. Horton are warmly welcoming the interest in them again and can't stop smiling as they've watched their values rising between 3 to 7%.

Just yesterday I wrote a post about the residential real estate investors now returning to the market which is a clear sign that the pros are seeing something that is worth their time. When you add the cautious climb of the builder stocks to that, maybe there is light at the end of the tunnel after all. One analyst reminds us that historically these stocks do rally well before the stats catch up to the fact that a genuine recovery is under way.

 

_______________________________________________________________________________

Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 2 commentsEsko Kiuru • October 03 2007 04:31PM
Home builder stocks rally
share
Most of the housing market reports that you see in the news still come out on the down side. Generally speaking they are. Resales continue to be soft with MLS inventories hovering at high altitudes and builders are struggling with unsold homes and… more
Real estate investors are coming back
share
As the housing market started its slide a while back you could see and hear the speculators head for the sidelines. Many had made handsome profits and the time had come to enjoy the rewards and relax. They are the astute ones. Those who got in too… more
Stated income mortgage issue still brewing in Nevada
share
The updated consumer protection law that was put in the books earlier in the year is effective as of today. One of its stipulations is that a stated income mortgage loan can be a crime in the state, as interpreted by some legal experts. And that has… more