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The Homebuilders

Discussion in 'Stock Message Boards NYSE, NASDAQ, AMEX' started by Tiptopptrader, Aug 16, 2016.

  1. bigbear0083

    bigbear0083 Content Manager
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    Homebuilders Join the List
    Jun 15, 2017

    In the eight-plus years that this bull market has spanned, the number of “I never thought I’d see that again” moments has continued to pile up. One of the first important ones was back in 2010 when the S&P 500 approached the “pre-Lehman’ levels of 1,250. The psychological boost from trading back to that level couldn’t be understated as it signaled a return to normalcy in the market. We first approached the pre-Lehman levels back in April 2010, but then markets pulled back on one of the seemingly annual bed-wettings over Greece, so we had to wait another eight months until December of the same year before actually getting over the hump.

    Another big notch in the belt of the bull came in the Spring of 2013 when the S&P 500 notched a new all-time high, surpassing the previous peak from October 2007. After all the scars of New Century Financial right through to Wachovia, Merrill, Lehman, and AIG, the market was finally able to put the past behind it and move forward to a new frontier. Back at those lows in late 2008/early 2009, when people were literally taking money out of the bank out of fears that they may not open tomorrow, there was no one who would have ever thought that US stocks would be at new all-time highs early on in the second term of President Obama. Two years later, the Nasdaq also made a new all-time high, hitting levels not seen in over 15 years.

    Yesterday, it was the homebuilders’ turn. While the highs from 2005 are still a ways from here, the stocks of homebuilders all broke out to ten-year highs yesterday. That’s a phrase that hasn’t been uttered in more than ten years! And they did it in unison. All three stocks that make up the S&P 500 Homebuilder group – DR Horton (DHI), Lennar (LEN), and Pulte (PHM) – traded at decade highs yesterday.

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    Truth be told, there is still more for the homebuilders to do before all-time highs are actually made. To get back to levels seen at the Summer 2005 peak, the homebuilders still need to rally more than 60%. However, the fact that these stocks were able to rally in what has recently been slowing housing data has been impressive. In fact, the latest releases of Building Permits, Existing Home Sales, New Home Sales, Homebuilder Sentiment, and Pending Home Sales have all come in weaker than expected. Are the stocks telling us something or just oblivious?

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    Ciao (Sheppy) and Jrich like this.
  2. bigbear0083

    bigbear0083 Content Manager
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    we had some really good housing #'s this week ... new home sales released today now at 2007 levels

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    homebuilders have had a nice year

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  3. T0rm3nted

    T0rm3nted Moderator
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    Road to homeownership gets rockier this spring as rates rise
    Source: https://www.msn.com/en-us/money/mar...-rockier-this-spring-as-rates-rise/ar-AAw0k7v

    Higher mortgage rates are making the already challenging task of buying an affordable home even tougher for many Americans this spring.

    In metro areas such as Denver, buyers are rushing to close a deal before mortgage rates get too high. In Dallas, some are embracing longer commutes to find homes they can afford. And in places such as Los Angeles, where the number of homes for sale is down sharply from a year ago, sellers routinely receive multiple offers.
     
  4. HumbleInvestor

    HumbleInvestor New Member

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    Technically, I would short XHB if I still hold it.
     
  5. bigbear0083

    bigbear0083 Content Manager
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    13-day losing streak here (longest ever) and another new 52-week low, back to early 2017 levels here

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  6. bigbear0083

    bigbear0083 Content Manager
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    Homebuilder Bounce
    Nov 6, 2018

    After performing miserably all year, homebuilders stopped going down in mid-September and have rallied close to 10% since. While the iShares Home Construction ETF (ITB) is still down sharply YTD and well below both its 50 and 200-day moving average (DMA), the fact that it finally caught a bid and made a low before the S&P 500 has bulls on the sector optimistic that this could be the beginning of a more substantial rally. Only time will tell if this sentiment is accurate or just wishful thinking.

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    Whenever we see situations like this, one area of the market we like to look at is the fixed income high yield market. The first chart below compares spreads for the overall high yield market to spreads on high yield credit for homebuilders over the last three years. From November 2015 right up through February of this year, spreads in the homebuilder group tracked spreads for the overall high yield market pretty closely. Beginning in late February, though, spreads for the homebuilder group widened out considerably, while spreads in the overall high yield market were much more contained. In fact, in the homebuilder group spreads widened out by over 100 basis points (bps) or 49%, rising from 234 bps in late February to 350 bps as of 10/26.

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    Looking at this another way, the chart below compares high yield spreads in the homebuilder group (plotted below on an inverted basis) to the price of the iShares Home Construction ETF (ITB) over the last 12 months. During this span, the two series have tracked each other very closely, where big declines in ITB were generally accompanied by much wider spreads in the high yield debt of homebuilders. More recently, as the homebuilder stocks have rallied, spreads for the group have narrowed right along with them.

    Looking more closely at this chart, we would note that if you are looking for early signs of a big move in the homebuilder stocks, moves in high yield debt for the group probably won’t be the tipoff. Take a look at the two shaded regions in the chart. Each one of them shows the two big legs lower that the homebuilder stocks (blue line) have seen during the course of the year, but in each case, it was the stocks that led the move in high yield spreads (red line) rather than the other way around. In the case of homebuilders, high yield spreads haven’t been much of a leading indicator this year.

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  7. bigbear0083

    bigbear0083 Content Manager
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    Homebuilders Get Happy
    Wed, May 15, 2019

    Homebuilder sentiment saw a stronger than expected increase in May as the NAHB sentiment survey rose more than expected to 66 from 63 and expectations of 64. Even after this month's increase, sentiment remains well off its cycle high of 74 from December 2017, but it does erase much of the swift leg lower we saw in Q4 of 2018.

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    Looking at a breakdown of this month's report by sales, traffic, and regional trends, gains were broad-based. The only category that didn't see a boost was sentiment in the Midwest. Present Sales saw the biggest increase in terms of sales and traffic trends, and like the headline index, these categories remain well off their cycle highs but have mostly erased their Q4 declines.

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    In terms of regional sentiment, the Northeast saw the largest jump, increasing by ten full points to 65. With that gain, sentiment in the Northeast region is now at its highest level since 2005. It's also only the fourth month since 2013 where the Northeast didn't have the lowest sentiment of any region. Now, imagine what would happen to sentiment in the region if the sun ever came out!

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    T0rm3nted likes this.

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