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."