Tax Credit-Fueled Numbers Send Homebuilder Stocks Soaring (HOV, BHS, XIN, RYL, MHO, SPF, PHHM)
On Wednesday, the Department of Commerce estimated that new-home sales rose nearly 15% in April to a seasonally-adjusted annual rate to 504,000—the highest levels since May 2008. This was significantly higher than estimates projecting an annual rate of 425,000. A year-to-year comparison shows that new-home sales are up 48%.
On the whole, the Homebuilder Stocks Index is up 3% overall today, and up 2% compared to the S&P 500. Over the last three months, Hovnanian Enterprises (HOV) and Brookfield Homes (BHS) have significantly outperformed within the sector, up 62% and 36%, respectively. Over the same time period, Xinyuan Real Estate (XIN) and Ryland Group (RYL) have underperformed, down 29% and 19%, respectively.
The tax credit for new homebuyers likely helped drive the overall housing numbers. The incentive was worth up to $8,000 and expired at the end of April. Analysts have been wondering how the housing market will hold up once the credit expires.
Over the last month, all of the companies in the Homebuilder Stock Index have traded in negative territory, with M/I Homes (MHO), Ryland, and Standard Pacific (SPF) as the bottom performers. Palm Harbor Homes (PHHM) is lagging today after reporting disappointing earnings after the close yesterday.
Investors can track Homebuilder Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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