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Homebuilder stock prices rise with 3rd straight month of positive sales data

Homebuilder Stock Prices Up on Strong Sales Data

Phoenix Real Estate Market Stats Among Strongest

NEW YORK (MarketWatch) — Shares of U.S. homebuilders rallied on Wednesday after a Wells Fargo analyst’s research report said data from 20 select markets nationwide are showing strength across the board.

“For the third consecutive month, our survey points to an improvement in orders suggesting 2012 may be the long-awaited recovery year for housing,” the note said.

PulteGroup PHM +9.10%   added more than 8%, Lennar Corp. LEN +5.10%  gained 5%, D.R. Horton DHI +4.84%   rose 4.2% and Toll Bros. TOL +3.99%   gained 3.8%.

The bellwether industry ETF, the iShares Dow Jones U.S. Home Construction Index Fund ITB +3.59%  rose 3.4%.

The group had fallen sharply Tuesday as worries about first-quarter earnings and European bond distress battered stocks.

Wells Fargo’s monthly Neighborhood Watch Survey, which tracks 150 sales managers at housing tracts in 20 markets, showed that March results were strong across all measured metrics. In particular, the survey noted that March’s numbers surpassed poll participants’ expectations by the widest margin since the survey started, in 2001.

It was the second straight month of historic outperformance compared to expectations, the report said.

“Sales managers reported a decline in above-expected traffic levels and traffic quality relative to last month, but results are significantly higher than last year and March’s monthly historic averages. Further, given several months of improving sentiment, it’s also possible that expectations have risen, making the stronger results somewhat less of a surprise,” the report’s authors concluded.

Wells said that pricing in the 20 markets also improved, both month-to-month and over year-ago figures. Sales managers’ commentary on market activity indicated that buyer confidence seems to be improving as inventory shrinks.

“Sales managers suggested there is a sense of urgency in the marketplace as buyers anticipate higher home prices and/or mortgage rates,” the report said.

That sentiment seems justified, as the report further concluded that relative to expectations, pricing in March improved versus February, with 36% of respondents increasing base prices, versus 30% last month. “Not since April 2006 has our survey shown such strong pricing,” the report said.

Regionally, the data show that the strongest markets in March were Phoenix, Northern California, Chicago, Denver, and Indianapolis. Philadelphia, Orlando and Tampa were the weakest.

“March historically is the most important month of the year for new home sales, which makes this month’s results even more significant as it suggests momentum is building, which could further motivate on-the-fence buyers,” the report concluded.

Source: Market Watch, 4/11/12

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