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Good News: Housing Sector Soars

Shares of home builders, home-improvement retailers and home-furnishers were all up on Thursday, following some good news in the sector.

Despite widening its loss in the second quarter, home builder Lennar (LEN) reported some promising data Thursday morning.

The company posted a 47% increase in sales of completed homes and 63% jump in orders from the first quarter. Lennar also saw a 15% cancellation rate, smaller than the 22% rate in the year prior.

Revenue declined to $891.9 million, from $1.13 billion last year, but Lennar still managed to beat Wall Street's estimate of revenue of $597.5 million.

Shares of Lennar soared 17% to $9.12 in afternoon trading, and shares of other home builders followed suit. Centex (CTX) grew 6.5% to $8.64, KB Home (KBH) spiked 8% to $14.73, Toll Brothers (TOL) grew 5% to $17.06 and Pulte Homes (PHM) was up 6% to $9.

The momentum trickled down to home furnishers and home-improvement retailers.

Bed Bath & Beyond (BBBY) skyrocketed 10% to $31.30 in afternoon trading, a day after reporting an unexpected gain in first-quarter earnings.

Home Depot (HD) grew 4% to $23.59, while rival Lowe's (LOW) also bumped up 4% to $18.86.

J.P. Morgan analyst Christopher Horvers said in a note on Thursday that both retailers are on solid ground going forward. Home Depot is working on improving its merchandise, systems and supply chain, while Lowe's is focused on fine-tuning its model.

But how long will this winning street last? Only yesterday the Commerce Department announced that new home sales in the United States slipped .6% in May to 342,000, falling short of economists' forecast. And sales of previously owned homes rose 2.4%, but also missed expectations.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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