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New Homes Find More Buyers in February: Housing Stocks Rally
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The uptick in mortgage rates seems to be having minimal effect on new home sales. In February, new home sales surged to a seven-month high, indicating the gradual housing market recovery on strong demand. The upside was primarily attributable to unseasonably warm weather across a large part of the country despite lean inventories of homes for sale as well as slightly higher mortgage rates.
According to the latest joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new home sales grew to a seasonally adjusted annual rate of 592,000 last month. This reflects a 6.1% increase from January’s 558,000 units, and an increase of 12.8% from 525,000 in Feb 2016.
February’s new home sales report was a big relief for the U.S. housing sector after an underwhelming existing home sales report released earlier this week by the National Association of Realtors. According to the report, existing home sales were down 3.7% in February from prior month. Investors should note that existing home sales make up a larger part of all U.S. real estate activity relative to new home sales.
Meanwhile, February’s median sales price dropped 3.9% from the prior month and 4.9% from the comparable period a year ago to $296,200. Apart from warm weather, lower prices are helping to boost sales. Last month was the second-warmest February on record, as per the National Oceanic and Atmospheric Administration report.
Again, inventory continues to slip, leaving less homes for future sales. The supply of homes decreased to 5.4 months from 5.6 months in January. There were 266,000 new houses on the market at the end of February.
A Strong Start to 2017?
The housing sector saw considerable improvement in 2016 since the recession in 2007. Despite concerns regarding the possibility of more interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely unaffected.
The 2017 outlook for the U.S. homebuilding industry is quite compelling given the affordable interest rates, along with impressive housing starts and new home sales data. Resilient job growth, healthy demand-supply balance along with seemingly high homebuilders’ confidence add to the momentum.
Apart from the positive new home sales data, KB Home reported better-than-expected first-quarter fiscal 2017 earnings after the closing bell. The company’s shares climbed 1.1% yesterday. The company’s earnings and revenues grew 7.1% and 20.7% year over year, respectively, buoyed by strong demand.
Earlier this week, Lennar reported better-than-expected first-quarter fiscal 2017 earnings and sales on solid demand. Lennar’s CEO, Stewart Miller, said “our homebuilding operations have gone from slow and steady to a faster than expected sales pace throughout our first quarter,” thanks to a combination of economic optimism, wage and job growth, and increasing consumer confidence.
Moreover, a good industry rank (Top 38% out of more than 256 industries) for homebuilding further supports the growth potential. In fact, in the last one year, the Zacks Building-Residential/Commercial industry has outperformed the broader market (S&P 500), as you can see below:
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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New Homes Find More Buyers in February: Housing Stocks Rally
The uptick in mortgage rates seems to be having minimal effect on new home sales. In February, new home sales surged to a seven-month high, indicating the gradual housing market recovery on strong demand. The upside was primarily attributable to unseasonably warm weather across a large part of the country despite lean inventories of homes for sale as well as slightly higher mortgage rates.
Shares of prominent homebuilders such as Toll Brothers Inc. (TOL - Free Report) , Lennar Corporation (LEN - Free Report) , PulteGroup, Inc. (PHM - Free Report) , KB Home (KBH - Free Report) , DR Horton Inc. (DHI - Free Report) escalated yesterday after the release.
Compelling February New Home Sales Data
According to the latest joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new home sales grew to a seasonally adjusted annual rate of 592,000 last month. This reflects a 6.1% increase from January’s 558,000 units, and an increase of 12.8% from 525,000 in Feb 2016.
February’s new home sales report was a big relief for the U.S. housing sector after an underwhelming existing home sales report released earlier this week by the National Association of Realtors. According to the report, existing home sales were down 3.7% in February from prior month. Investors should note that existing home sales make up a larger part of all U.S. real estate activity relative to new home sales.
Meanwhile, February’s median sales price dropped 3.9% from the prior month and 4.9% from the comparable period a year ago to $296,200. Apart from warm weather, lower prices are helping to boost sales. Last month was the second-warmest February on record, as per the National Oceanic and Atmospheric Administration report.
Again, inventory continues to slip, leaving less homes for future sales. The supply of homes decreased to 5.4 months from 5.6 months in January. There were 266,000 new houses on the market at the end of February.
A Strong Start to 2017?
The housing sector saw considerable improvement in 2016 since the recession in 2007. Despite concerns regarding the possibility of more interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely unaffected.
The 2017 outlook for the U.S. homebuilding industry is quite compelling given the affordable interest rates, along with impressive housing starts and new home sales data. Resilient job growth, healthy demand-supply balance along with seemingly high homebuilders’ confidence add to the momentum.
Apart from the positive new home sales data, KB Home reported better-than-expected first-quarter fiscal 2017 earnings after the closing bell. The company’s shares climbed 1.1% yesterday. The company’s earnings and revenues grew 7.1% and 20.7% year over year, respectively, buoyed by strong demand.
Earlier this week, Lennar reported better-than-expected first-quarter fiscal 2017 earnings and sales on solid demand. Lennar’s CEO, Stewart Miller, said “our homebuilding operations have gone from slow and steady to a faster than expected sales pace throughout our first quarter,” thanks to a combination of economic optimism, wage and job growth, and increasing consumer confidence.
Moreover, a good industry rank (Top 38% out of more than 256 industries) for homebuilding further supports the growth potential. In fact, in the last one year, the Zacks Building-Residential/Commercial industry has outperformed the broader market (S&P 500), as you can see below:
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>