Sector Snap: Homebuilders earnings lift sector
LOS ANGELES (AP) — Homebuilder stocks surged Tuesday after a couple of major sector companies reported better-than-expected sales trends and a new report showed that U.S. home prices accelerated in November compared with a year earlier.
D.R. Horton Inc., the nation's largest homebuilder, led the sector rally, with shares jumping more than 10 percent in afternoon trading. The Fort Worth, Texas, company reported earlier in the day that its net income more than doubled in its fiscal first quarter, handily beating Wall Street's expectations.
Horton's completed home sales climbed 26 percent during the quarter, while new home orders rose 39 percent from a year earlier.
The builder's sales trends echoed those of Beazer Homes USA Inc., which reported fiscal first-quarter results late Monday. Its shares were up nearly 6 percent.
Beazer's completed home sales climbed nearly 20 percent compared to the last three months of 2011, while new-home orders jumped about 29 percent. The Atlanta homebuilder slid to a loss due to the impact of a larger income tax benefit in the prior-year quarter.
Stable job gains and low mortgage rates are spurring buyers who were on the sidelines during the recession to return to the housing market.
Completed sales of previously occupied homes rose last year to their highest level in five years. While sales of new homes climbed nearly 20 percent to 367,000 last year, the most since 2009.
In addition, a tight supply of homes available for sale in many markets has helped drive home prices higher.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday rose 5.5 percent in November compared with the same month a year ago. That's the largest year-over-year gain in six years.
Williams Financial Group analyst David Williams reiterated a "Buy" rating on Horton, noting in a research note published Tuesday that he believes the company will continue to outperform other major builders.
He affirmed a "Hold" rating on Beazer, citing concerns about the builder's ability to sustain growth this year, despite having delivered a solid quarter. Williams added that he believes 2014 will likely be the turning point when Beazer returns to profitability.
Horton shares added $2.16, or 10.1 percent, to $23.47 in afternoon trading. Shares are up almost 19 percent this year.
Beazer shares rose $1.02, or 5.6 percent, to $19.20. The builder's shares are up 14 percent this year.
Elsewhere in the sector:
— PulteGroup Inc. climbed 26 cents to $21.22.
— Lennar Corp. rose 56 cents to $42.47.
— KB Home gained 54 cents, or 3 percent, to $18.64.
— Toll Brothers Inc. rose 17 cents to $37.70.
— Hovnanian Enterprises Inc. added 20 cents, or 3.4 percent, to $6.13.
— Ryland Group Inc. gained 73 cents to $40.56.
— Meritage Homes Corp. rose 42 cents to $43.13.
— Standard Pacific Corp. added 13 cents to 8.41.
— M.D.C. Holdings Inc. rose 33 cents to $41.38.
— M/I Homes Inc. climbed 75 cents, or 2.8 percent, to $28.23.