This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Homebuilder Stocks: Behind the Numbers

Stocks in this article: XHB ITB HOV TOL DHI BZH PHM WY MDC BHS RYL MTH NVR LEN KBH MHO

(Homebuilder stocks earnings article updated with Hovnanian Enterprises results.)

NEW YORK ( TheStreet) -- Homebuilders have been under pressure for some time as the housing market continues to struggle to regain its footing.

New Homes

Data released last month showed sales of newly built homes unexpectedly fell 8.1% in October to a weaker-than-expected annual rate of 283,000 , after rebounding in September. Many industry watchers agree a true rebound is still a ways off. New-home sales are expected to have risen to an annualized rate of 300,000 in November.

The sharp year-over-year decline indicates there was no major rebound, said Douglas S. Roberts, chief investment strategist for Channel Capital Research.

The SPDR S&P Homebuilders (XHB), an exchange-traded fund that tracks the homebuilder sector, remains 61.9% off its peak of $46.08 in early 2006. The iShares Dow Jones US Home Construction (ITB) ETF remains 73.5% off its peak of $50.10 in the spring of 2006.

Roberts said September's big month-over-month percentage jump in new-home sales -- as well as the 10% jump in September's existing-home sales -- is due in part to home sales that went under contract over the summer when homebuyers rushed to take advantage of federal tax credits . Those sales weren't closed until September. A number of those sales were likely families with children who wanted to move over the summer rather than have their kids switch schools mid-school year, he said.

Roberts added that home inventories are likely even larger than the government was able to report, pointing to a "shadow inventory" of homes owners would like to sell but have kept off, or taken off, the market because they don't think the houses will sell.

Despite September's better-than-expected rebound, the month's existing-home sales data was the third-worst rate on record and 19.1% below year-earlier levels when first-time homebuyers took advantage of the federal tax credits . Sales of previously occupied homes fell 2.2% in October to a slightly better-than-expected seasonally adjusted annual rate of 4.43 million units

Stabilization in home sales -- newly built or previously occupied -- may not lead to a rebound in the overall housing market given the "overhang of existing homes from foreclosures," Roberts said. "A foreclosure moratorium doesn't solve the issue, it just drags out the problem."

Taking all this into account, here is a roundup of homebuilder earnings from the third quarter along with analyst commentary on where the sector is headed.

1 of 15

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs