U.S. housing sector is showing signs of a rebound on
renewed customer confidence, though new-home sales are still 50 per cent below
their 40-year average.
New home sales in June stood at 350,000 according to
data from the Commerce Department, compared to 304,000 registered in June last
year. This is having an impact on the shares of homebuilders.
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PulteGroup, Inc.(NYSE:PHM) shares have nearly doubled
this year, while that of Lennar Corporation(NYSE:LEN) is up nearly 60 percent, Toll
Brothers Inc(NYSE:TOL) have appreciated about 50 percent and D.R. Horton,
Inc.(NYSE:DHI) has risen 43 percent.
Analysts and investors in such companies, who hold
substantial portfolio investments, are excitedly talking about an increase in
traffic and improvement in pricing for homes.
The housing sector went into a slump during the
sub-prime mortgage crisis which hit the country in 2007 and its been in this
decline for nearly six years now. There have been brief spikes of demand, but
nothing spectacular as debt-wary Americans have stayed away from investing in
new homes.
The slowdown in the economy and the loss of jobs has
also not helped matters.
The Standard & Poor's Supercomposite Homebuilder
Index of 11 companies saw a rise of 53 percent as on Aug. 10, compared to a 12
percent rise for the broader S&P 500 Index, data showed.
Big developers such as Pulte Group and D R Horton have
also been raising prices with increased demand from customers who are upgrading
and have better credit rating.
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"Sales are a long way from where they were, even
if you take out the bubble and look at more normal housing cycles," Doug
Duncan, chief economist at Washington-based Fannie Mae told Bloomberg.
"While we're still below a level you would expect
to see, we're on the right direction."
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