Builder Stocks Gain As Demand For Homes, Prices Rise
Homebuilder stocks rose in Thursday trading after JPMorgan Securities upgraded PulteGroup (PHM), KB Home (KBH) and Beazer Homes USA (BZH), citing higher demand, which is leading to rising housing prices. A new industry report also noted home prices rising across many U.S. metro areas.
The brokerage said the housing market is set to improve over the next 18 months.
PulteGroup shares were up 4.6% in afternoon trading. KB Home advanced 6.7% and smaller Beazer, the biggest gainer among builders Wednesday, rose 6%.
Lennar (LEN), the largest company in the homebuilders group, lifted 2.8%. The Building-Residential/Commercial group is ranked No. 9, near the top of the list of 197 industry groups tracked by IBD.
D.R. Horton (DHI) stock gained 2.7%, Toll Brothers (TOL) 0.5% and Standard Pacific (SPF) 3.8%.
JPMorgan's report followed a positive home pricing dispatch Thursday from the National Association of Realtors, and reports earlier in the week also citing higher home prices and a rising number of home sales.
NAR said the median single-family home price rose in 110 of 147 metropolitan areas, based on home loan closings in the second quarter, in comparison with the same quarter in 2011.
By region, there were 1.78 million existing homes sold in the South, up 1.3%; 1.14 million in the West, down 5.3%; 1.03 million in the Midwest, up 1.3%; and 590,000 in the Northeast, off 0.6%.
The metro area with the biggest gain was Florence, S.C., where the median price rose a whopping 20.5%, from a low base.
Areas with gains of 10% or more included: Minneapolis-St. Paul, Honolulu, San Jose-Sunnyvale, Calif., and Tampa-St. Peter*****urg, Fla.
The national median existing single-family home price was $181,500 in Q2, up 7.3% from $169,100 in Q2 2011.
That's the strongest year-over-year increase since Q1 of 2006, when the median price spiked 9.4%. Still, even with the strong Q2 rise, the current median price is 20.1% below the record set in 2006.
In the condo sector, the median price was $178,000, up 7.5%.
First-time buyers purchased 34% of all homes in the quarter, vs. 35% a year ago.
NAR chief economist Lawrence Yun said home prices are poised to rise in even more markets.
"It's encouraging to see a growing number of metro areas with rising median prices, which is improving the quality position of existing homeowners," Yun said.
The economist noted that some of the improvement in prices is due to a smaller share of sales in the low-price range, where inventory is tightest.
