Toll Brothers: Homebuilder Winners and Losers

NEW YORK -- Shares of homebuilders got a boost Tuesday after a report showing a rise in home prices -- the first quarterly increase in three years and the latest sign of an incipient recovery in housing.

On Tuesday, the Standard & Poor's/Case-Shiller's U.S. National Home Price Index, which is closely watched by the market and was used as a benchmark for the government's bank stress tests, rose 1.4% in the second quarter from the first three months of the year. That's the first quarter-over-quarter increase since the second quarter of 2006. Home prices also rose from May to June, the second-straight monthly gain, the index showed.

Still, prices are down nearly 15% from the second quarter of last year and 30% from their peak in 2006.

An $8,000 tax credit for first-time homebuyers that expires this fall has helped builders sell homes, as well as their focus on cheaper starter homes to compete with the glut of foreclosures on the market. Many housing companies posted big jumps in new orders in spring compared with the winter quarter, which they said was bigger than just a seasonal pattern.

Last week, the government said building permits rose 6% in July, while construction of single-family homes edged up 2%, its fifth-straight monthly increase. New construction is up 37% from its bottom this winter.

And sales of new homes, which have risen month-over-month since April, are expected to increase almost 2% when the Commerce Department releases data on Wednesday, according to economists surveyed by Thomson Reuters.