Home Builder Stocks at Highest Point in 2 Years After 6-Month Rise

Excerpt from an article in

The New York Times

Thursday, March 22, 2012

Home Builder Stocks at Highest Point in 2 Years After 6-Month Rise

By CHRISTINE HAUSER

After a bullish report on housing at a late summer investment conference in Dallas, the officials at Federated Investors decided to sink a few million dollars into the shares of the home builder Lennar.

Philip J. Orlando, Federated’s chief equities market strategist, was hoping for a return of 20 percent to 30 percent, confident in an improving jobs market and upticks in housing construction and sales data.

Like many other stocks in the home building industry, Lennar surged, nearly doubling in price.

Home builder stocks are at their highest level in two years, with the Standard & Poor’s index of 11 home builder stocks rising 80 percent since October, the most recent low for the industry.

Investors looking to ride the wave from the last six months, however, may be too late. Home builder shares typically increase before the spring and summer home-selling season. And while housing reports have shown some improvement in recent months, data this week has been mixed. A report on Wednesday showed that the sales of existing homes declined slightly in February, while median sales prices rose for the first time in more than a year.