With all of the doom and gloom in the real estate news these days, this is some great news. Wall Street is getting bullish on home builder stocks. Beazer Homes shares soared 37% yesterday, and Lennar Corp. was upgraded to stable.
According to the National Association of Home Builders, the inventory of new homes has shrunk to a 10 month supply. That may still seem like still too much inventory, but it is down significantly from a year ago. Builders are again building the homes people want to buy at a price they are willing to buy at. And they are only building what will sell, not what will be a battle for marketshare.
So builders have gotten their inventory problems under control. Home buyers are taking the inventory off the marketplace. These are the positive signs that will signify a bottom and provide a base to grow from.
Great news for the home builders and Wall Street is rewarding them.
In recent trading, Beazer shares climbed 24% to $2.70. Shares rose as high as $2.99 earlier Monday and have more than doubled in the past 3 months. Last month, shares dipped as low as 24 cents before rebounding.
Other home builders trading higher Monday included Hovnanian Enterprises Inc. (HOV), up 13% to $2.68, and Standard Pacific Corp. (SPF), up 10% to $2.03. Ryland Group Inc. (RYL) gained 5% to $24.35, and Lennar increased 3% to $10.25.
Bryan said that last week Moody’s increased its outlook on Lennar to stable, making it the only builder to have that rating. WSJ.com.
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{ 3 comments… read them below or add one }
I hope they are smart this time and they dont start building a million crappy half baked homes with zero thoughts on aesthetics and sustainability. The suburban subdivisions where everyone is all packed together is the wrong way to do it, everybody needs a little space around them and hopefully some happy greenery and permaculture.
It's great to have some positive news, or at least a positive day for home owners! I feel sorry for my neighbors that bought their condos in the complex that I live in, the landlord had to lower the rent by a couple hundred dollars for those of us that didn't purchase just so we'd stay and the condos wouldn't be vacant. I love where I live (for now) but I'm glad I don't feel stuck here. I'm also ready for friends that would like to move to be able to do so without feeling disappointed that they've lost such a chunk of money. Those are the friends that should be building their dream houses instead staying put for a little while. I'm glad for the optimistic outlook for now.
What persons need to understand about stocks and Wall Street is that sometimes a company can post bigger and better projections, but that it does not come form selling their product. Layoffs, sales of assets, can paint a picture that all is well…when it isn’t. Time will tell.