January 29, 2014 at 16:57 PM EST
Homebuilder ETFs Rise On Solid Earnings, Strong Home Prices
NYSEARCA:XHB, NYSE:DHI Related posts: Is The Housing Market Recovery A Fake? [Lennar Corporation, PulteGroup, Inc., D.R. Horton, Inc., KB Home] Why It’s Not Too Late To Buy Housing Stocks [The Home Depot, Inc., Lowe's Companies, Inc., SPDR S&P Homebuilders (ETF)] Solid Earnings Results Are Driving Aerospace & Defense ETFs Time To Consider A Home Improvement Retailer? [The Home Depot, Inc., Lowe's Companies, Inc., Lumber Liquidators Holdings Inc] It’s A Merry Christmas For Homebuilder ETFs

homebuildersThanks to the taper, concerns have begun to build over the homebuilders market. This key segment of the economy was doing quite well, but with the prospect of higher rates, many are worried that demand for housing will slow down.

After all, higher interest rates push up mortgage rates too, and with added costs, many can’t afford the same level of house that they once could. This has led many to wait on buying new homes, or reconsider a housing purchase at this time.

This concern was really starting to hit homebuilder stocks which were underperforming broad markets over the past month. However, thanks to some solid data on Tuesday, the space is starting to look a bit more promising, even with the taper worries.

Earnings in Focus

A key reason for strength in the homebuilding sector was the solid earnings report from DR Horton (NYSE:DHI). The firm reported adjusted earnings of 36 cents a share, beating out the Zacks Consensus Estimate of 30 cents a share. Furthermore, earnings grew 80% year-over-year, as margins expanded and the number of homes closed increased.

Home sales figures were especially robust for the company, as this number increased by 33.6% year-over-year. This news helped to boost DHI more than 10% on the day, and it also increased sentiment about the space and that solid earnings were on the way for the rest of the sector (see the Guide to Housing ETFs).

Case-Shiller Index

Beyond this good earnings report, investors also saw some great news from the all-important 20-city Case-Shiller index. This key home price benchmark rose 13.7% in November (year-over-year), the best performance since early 2006, suggesting that it will another solid time for the housing sector. And although prices dipped when compared to the previous month, many investors didn’t put much weight into this as this typically happens as we approach the winter months.

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Related posts:

  1. Is The Housing Market Recovery A Fake? [Lennar Corporation, PulteGroup, Inc., D.R. Horton, Inc., KB Home]
  2. Why It’s Not Too Late To Buy Housing Stocks [The Home Depot, Inc., Lowe's Companies, Inc., SPDR S&P Homebuilders (ETF)]
  3. Solid Earnings Results Are Driving Aerospace & Defense ETFs
  4. Time To Consider A Home Improvement Retailer? [The Home Depot, Inc., Lowe's Companies, Inc., Lumber Liquidators Holdings Inc]
  5. It’s A Merry Christmas For Homebuilder ETFs

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