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. 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?
we had some really good housing #'s this week ... new home sales released today now at 2007 levels homebuilders have had a nice year
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.
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. 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. 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.
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. 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. 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!
A Banner First Half for Homebuilders as Mortgage Rates Fall Mon, Jun 17, 2019 After a very weak second half of 2018 due to rising mortgage rates, the S&P 1500 Homebuilder group has rallied 35% in 2019 to a new 52-week closing high as of last Friday. Below is a chart of the S&P 1500 Homebuilder group vs. an inverted look at Bankrate.com's 30-year national average fixed mortgage rate. The Homebuilder group bottomed right around the time that mortgage rates peaked, and they've been rallying as mortgage rates have been falling. Below is a custom portfolio we've built on our website (custom portfolios are available to Premium members and higher) to see how the individual members of the S&P 1500 Homebuilders group look. As you can see, every single stock in the group is up at least 15% year-to-date, with some like TopBuild (BLD), Century Communities (CCS), LGI Homes (LGIH), Installed Building Products (IBP), and William Lyon Homes (WLH) all up more than 60%! At the moment, all but one of the homebuilder stocks is in a sideways trend or long-term uptrend pattern. The majority are also overbought, meaning they're currently trading more than one standard deviation above their 50-day moving averages. Below we show the individual chart patterns for the homebuilder stocks. Here you can see that the entire group is made up of mostly bullish chart patterns, with prices trending up and to the right. Most 50-day moving averages (blue lines) are pointed higher, and the 200-day moving averages (purple lines) are starting to turn higher as well.
Housing starts data tomorrow (I think!). I'm thinking a good-ish number would bring a more neutral-to-leaning-hawkish spin on FOMC comments on Weds.
Massive Moves for Homebuilder Stocks Mon, Mar 30, 2020 Incredibly, a major homebuilder like KB Home (KBH) rose 48.35% last week, but it's still down 47.5% year-to-date. M/I Homes (MHO) is up 41.28% over the last week but is still down 53.3% year-to-date. You see similar numbers up and down the list. And even after a huge rally last week, every homebuilder on the list is still 20% below its 50-day moving average or more. Toll Brothers (TOL) is another name that is still down nearly 50% year-to-date even though it rallied 37% last week. Ahead of the open this morning, TOL is trading 42.75% below its 50-day moving average.
Homebuilders Up Huge Fri, Aug 28, 2020 As with many areas of the market, the homebuilder group has skyrocketed higher over the last few months after initially plummeting during the COVID Crash in late February and early March. Below is a chart of the S&P 1500 Homebuilder group since 1994. After experiencing a bubble of pretty epic proportions during the real estate boom of the mid-2000s, the homebuilders went on to fall more than 86% during the Financial Crisis. From the group's lows in late 2008, it took more than 10 years to finally re-claim its prior highs back in February. The new all-time highs were made just a few days before COVID hit, and in a cruel turn of events, the group promptly fell 57% in less than a month! But the homebuilders are now getting the last laugh. During the COVID Crash, investors sold first and asked questions later. When they eventually decided to stop panicking, they realized that the new COVID economy would actually be a positive for the homebuilders. Lockdowns caused people to re-assess their living situations, and a lot of people decided they wanted a change -- especially those living in cities that suddenly wanted more space in the suburbs with no commute to worry about. From the group's low on March 18th to today, the homebuilder index has surged 150% and re-taken those prior all-time highs once again. At no time during the housing bubble of the early 2000s did the homebuilder group experience a move like the one seen post-COVID Crash. As shown below, the group's 100-day rate of change nearly hit +150% recently, which is more than double the best move seen during any prior 100-day period since 1994. Below is a snapshot of the individual stocks that make up the homebuilder group run through our Trend Analyzer tool. While these stocks have experienced some downside mean reversion from very overbought levels over the past week, nearly all of them are still extended well above their 50-day moving averages. Every single stock in the group is in a long-term uptrend based on our proprietary "trend" algorithm, and 14 of 16 names are up more than 10% YTD. After hitting an extreme roadblock during the COVID Crash, the homebuilder stocks have been some of the very best performers of the market over the last few months.
I was just looking at Howard Hughes and Brookfield. Both have housing components in their operations.
