Lennar: Homebuilder Winners and Losers

NEW YORK -- Shares of homebuilders climbed Friday after the National Association of Realtors said homes sales surged in July, while Federal Reserve Chairman Ben Bernanke said the U.S. economy is on the cusp of a recovery.

Home resales soared 7.2% to a seasonally adjusted annual rate of 5.24 million in July. It is the largest monthly increase in at least a decade as first-time buyers rushed to take advantage of a tax credit that expires this fall.

Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

First-time buyers must complete their sales transactions by the end of November to take advantage of a tax credit of 10% of the purchase price, up to $8,000. The real estate industry is lobbying Congress to get the credit extended.

Meanwhile, speaking at a Fed conference in Wyoming, Bernanke said the prospects for a return to growth in the near future appear good. However, he warned that lending is not back to normal.

Restoring the free flow of credit is a critical component to a lasting recovery.

Homebuilders rallied on the news. Shares of DR Horton (DHI Quote) gained 42 cents to $12.66, while Lennar (LEN Quote) rose 45 cents to $14.52 and Hovnanian Enterprises (HOV Quote) jumped 15 cents to $4.19.

Pulte Homes (PHM Quote) shares gained 28 cents to $12.67. Earlier in the week, shareholders for Pulte and rival Centex cleared Pulte's takeover of Centex, creating the largest homebuilder in the United States.