Pulte, MDC: Homebuilder Winners

NEW YORK ( TheStreet) -- PulteGroup ( PHM), MDC Holdings ( MDC) and other homebuilder stocks rose sharply in trading Tuesday on strong preliminary results and an increased dividend.

PulteGroup said Monday that preliminary results for the first two months of this year showed a 10.7% increase in net new signups, year-over-year, indicating that demand was growing among potential new-home buyers.

MDC Holdings shares soared after the small-cap homebuilder announced a 7.7% increase to its quarterly cash dividend , paying 14 cents per share on April 8 to shareholders of record on March 17.

That brings MDC's yield going forward to around 2.3% as of Monday's close.

PulteGroup shares jumped 8.4% to trade at $7.09 Tuesday afternoon, while MDC soared 11.5% to $27.63 ahead of the closing bell.

D.R. Horton ( DHI) rose 5.3%.

The Texas builder outpaced homebuilding peers with 2,225 local starts at the end of 2010, compared with PulteGroup's 898 starts.

KB Home ( KBH) added 5.6% to $13.58.

KB Home was named top homebuilder among its peers, as listed in Fortune's "World's Most Admired Companies."

Elsewhere, Lennar ( LEN) shares rose 4.2% to $20.23, while Standard Pacific ( SPF) added 4.3% to $3.91.

The SPDR S&P Homebuilders ( XHB), an exchange-traded fund that tracks the homebuilder sector, remains around 60% off its peak of $46.08 in early 2006, but rose 3.6% to $18.14 Tuesday afternoon. The iShares Dow Jones US Home Construction ( ITB) ETF remains more than 70% off its peak of $50.10 in the spring of 2006, but was higher by 4.2% to $13.54 on Tuesday.

The homebuilder sector has been improving but remains well off a late-spring peak last year when buyers were rushing to take advantage of federal tax credits for homebuyers , and is only slightly higher than at the beginning of 2010. Whereas other sectors have begun a rebound in earnest, the housing sector continues to lag.

-- Written by Miriam Marcus Reimer in New York.

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