Homebuilder Stocks: Winners & Losers

M/I Homes shares spike on narrower-than-expected losses. Ryland, Meritage and PulteGroup shares decline.
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) -- A

spike in existing-home sales led stocks in the homebuilder sector higher Monday, though firms like

Meritage Homes

(MTH) - Get Report


Ryland Group


failed to keep pace with the group.

Shares of

M/I Homes

(MHO) - Get Report

easily outpaced, gaining 7.1% at midday to $11.42. The strong percentage gain amounted to just 76 cents, however, since the small-cap builder's shares trade around $11.

Columbus, Ohio-based M/I Homes posted narrower-than-expected quarterly losses early Monday, posting a quarterly loss of $2.1 million, or 11 cents per share, compared with a year-earlier loss of $21.1 million, $1.14 per share. Home deliveries decreased 23% year-over-year to 515 even as its operating gross margin of 18.1% reached its highest level in three years.

High-volume gainers included

D.R. Horton

(DHI) - Get Report

, up 1%,


(LEN) - Get Report

, 0.2% and

KB Home

(KBH) - Get Report

, up 2%.

Ryland shares traded 1% lower while Meritage lost 0.2%.


(PHM) - Get Report

shares fell 0.5%.

Earlier Monday,

National Association of Realtors reported that existing-home sales rebounded 10% in September to a better-than-expected seasonally adjusted annual rate of 4.53 million units

>>Existing-Home Sales Rise 10%

Economists had expected the figure to come in at 4.25 million units,

compared with a downwardly revised rate of 4.12 million units sold in August

. July's rate of 3.84 million homes sold was a

15-year low.

"I guess the numbers are reassuring but the housing market is still not back to where it was during the

first-time homebuyer's tax credit surge," John Canally, economist for LPL Financial, told



The economist pointed out that prices fell -- a poor indicator of the housing market's health -- though sales of existing single-family homes as well as multi-family units both rose.

"It's great to see a 10% pop but we need to see four or five months of double digit gains and falling inventories," he said. "This one-month pop is still just climbing back from the hangover" of homebuyer tax credits.

Despite the better-than-expected rebound, September's existing-home sales data remains 19.1% below year-earlier levels when first-time homebuyers were rushing to take advantage of those federal tax credits.

The national median existing-home price for all housing types was $171,700 in September, 2.4% below year-earlier prices and lower than $178,600 in August. Distressed homes accounted for 35% of sales in September, compared with 34% in August and 29% in September of last year.

NAR chief economist Lawrence Yun said the housing market is in the early stages of recovery. "A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions," he said.

Ahead of the report Canally told


market watchers should pay close attention to home inventories, as well as sales and prices. Existing-home inventories are well off their highs but still very high by historical standards, Canally explained.

Total housing inventories at the end of September fell 1.9% to 4.04 million existing-homes available for sale, a 10.7% supply at the current sales pace, down from a 12-month supply in August.

Yun said "vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path," Adding that "inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months."

The U.S. housing market has been "bouncing along the bottom on home sales since early 2009," Canally added, and while conditions have improved since then the market remains "kind of directionless."

"We need to see good, positive non-government-sponsored momentum in the housing market," he said.

The wild card in the housing market has become the unraveling foreclosure mess, the economist said, and how it will impact the housing market.

"Will banks take their eyes off the ball in terms of lending to focus on redocumenting already-foreclosed upon loans?" he asked. "I'd like to think rates are going to be low with quantitative easing, but worries about crossing Ts and dotting Is would slow the healing process down."

Just as the subprime mortgage troubles expanded into a total housing market downfall, the latest scandal in the home loan industry has expanded into a nationwide political firing line aimed -- once again -- toward the banks due to

problems with foreclosure filings

, dubbed "robo-signing."

The housing market has been under tremendous pressure for some time, and demand fell further after the

springtime expiration of federal tax credits for homebuyers


>>4 Top Homebuilder Stocks: Life After the Tax Credit

A report on new-home sales in July is due to be released on Friday. The consensus call is for sales of newly-built homes to have risen to a seasonally adjusted annual rate of 291,000 in August according to estimates from



-- Written by Miriam Marcus Reimer in New York.

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