Shares of homebuilders jumped sharply in Wednesday’s
session after the construction market in the US is growing by leaps and bounds
at a record-breaking rate as seen in the last 4 years. MarketWatch reported
that analysts had originally predicted a figure of 770,000 for construction of
new homes, but the figure ultimately came to 872,000 last month at a jump of
15%.
Construction on brand new
single-family homes and multi-dwelling units such as condos and townhouses went
up 11% and 25% respectively in September. The former constitutes around
three-quarters of the housing market, with the latter not displaying any
continuous trend so far, even if the growth rate looks good as of now.
Building permits requested are also on a high, with a climb
of 11.6% to an annual rate of 894,000 after a slight slump in August to
801,000. Single-family homes went up 6.7% to an annual rate of 545,000 and
multi-dwelling permits climbed 20.3% to 349,000 last month. All regions except
the Northeast are indicating that the housing market is recovering after several
years of crisis, with the West and South experiencing an increased demand of
20%.
Has Homebuilder
Sector Found The Bottom and Time To Buy? Get Comparative Analysis Here
The factors contributing to the sudden demand in housing
are: the foreclosure crisis fading out, improved economy, and interest rates
that are at a record low. In spite of the brilliant turnaround, the growth rate
at 35% as compared to last year, has not been able to catch up to the figures
in its glory days. Housing demands easily crossed 2 million each year back
then. Steve Blitz, chief economist of ITG Investment Research, is not too
hopeful about real estate market due to the high unemployment rate of 7.8% in
the US
and a sluggishly growing economy.
Even so, the housing market contributed 0.2% to the growth
rate of the US
economy of 1.3%, without which, the rate would stand at 1.1%.
Publicly home builders like Meritage Homes, KB Home, and
D.R. Horton are having a field day due to the improved real estate market and
home-builder stocks doubling and tripling profits over the last year.
Manufacturers of building materials have also done well such as Simpson
Manufacturing and Owens Corning, which have gone up 25% and 23% respectively.
Hovnanian Enterprises, Inc.(NYSE:HOV) soared 10% to $4.16
and made a new 52-week high of $4.19, KB Home(NYSE:KBH) rose 10% as well to a
new 52-week high of $16.96. D.R. Horton, Inc.(NYSE:DHI) added 4.30% to $21.57, Beazer
Homes USA, Inc.(NYSE:BZH) surged 6% and The Ryland Group, Inc.(NYSE:RYL)
climbed 4.61%.
No comments:
Post a Comment