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
TheStreet Open House

Beazer, Lennar, Pulte, Other Homebuilders Fall Off Multi-Year Highs

Stocks in this article: BZHDHIHOVKBHLENMDCMHOPHMRYLSPFTOL

NEW YORK ( TheStreet) -- Homebuilder stocks were the 2013 leaders until peaking in mid-May. My benchmark for the housing market is the PHLX Housing Sector Index which peaked at 210.01 on May 20, up 22.6% on the year, leading all industry groups I have been tracking. Thursday the housing index set a 2013 low at 164.03, down 4.2% on the year. The index ended Friday virtually flat on the year.

The attempt at building new foundations began at 10 a.m. Thursday with the release of the National Association of Home Builders Housing Market Index which showed a rise of three points in August to a reading of 59, well above the neutral reading of 50, the highest in nearly eight years. Officials from the NAHB say that builders are seeing increased foot traffic and with firming prices potential buyers are anxious to find the right deal on a new single-family home.

Even with this elevated optimism the NAHB also has concerns. The inventory of both new and existing homes for sale is limited, and increasing production of new single-family homes is being slowed by tight credit for both builders and buyers, and by the limited supply of desirable lots and construction labor.

The release of Housing Starts data for July on Friday morning does not jive with builder confidence. Starts rose by a less than expected 5.9% with an annual rate of 896,000 units, while single-family starts declined 2.2% to a seasonally adjusted annual rate of 591,000 units in July. The chart below shows the growing gap between homebuilder confidence and single-family housing starts, which appear to be stalling at the 600,000 threshold.

The last time I profiled the homebuilders was on July 17 in, Fear and Greed Return to the Housing Market. At that time eight of the homebuilders were rated hold and three were rated sell. Today 10 are rated hold and one is rated buy according to ValuEngine. In July five were overvalued by more than 20%, and now there are just three. In July seven had gains of more than 25% over the last 12 months and today there are just three.

1 of 4

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!
DOW 16,399.67 +19.26 0.12%
S&P 500 1,904.01 +17.25 0.91%
NASDAQ 4,316.0740 +57.6360 1.35%

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