Homebuilder Stocks Mixed Despite Strong Housing Starts

Housing starts surged by 25.5% in October to an annual rate of 1.32 million units. Single-family housing starts rose by 10.7% to a seasonally adjusted rate of 869,000 units. Data on homebuilding was firm in November and October. The National Association of Home Builders reported that the Housing Market Index stayed at 63 in November.

But strong housing starts haven't helped housing stocks too much.

Mixed weekly charts for homebuilders put the focus on Fibonacci retracements on daily charts. D.R. Horton (DHI) and PulteGroup (PHM) have negative but oversold weekly charts. Lennar (LEN) has an oversold weekly chart, but will shift to positive on a close this week above its 200-week simple moving average of $43.09. KB Home (KBH) will have a positive weekly chart if the stock ends the week above its 200-week simple moving average of $16.19. Toll Brothers (TOL) has a positive weekly chart, but is well below its 200-week simple moving average at $33.57.

Here's the monthly graph of the NAHB Housing Market Index vs. Single-Family Housing Starts.


The NAHB Housing Market Index, at 63 in November, is in blue, with the scale on the left of the graph. Single-family starts are shown in red. The reading on the graph is 783,000 units reported for October. This scale is on the right of the graph.

The NAHB said that "a firming job market, a growing economy and rising household formations will keep the housing recovery on track into next year."

This optimism ignores the fact that mortgage rates are significantly higher than they were a month ago and that the price of a new home is rising much faster than family incomes.

Here's a scorecard for five major homebuilders, followed by their daily technical charts.


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