The Housing Chronicles Blog: Lemonade from Lemons: Homebuilder stocks rise

Monday, January 28, 2008

Lemonade from Lemons: Homebuilder stocks rise

Some analysts think that since builders have cut prices, mothballed projects and faced numerous impairments on their land holdings and housing inventory that the worst may be over for homebuilding stocks. From a story:

Housing stocks turned higher Monday, continuing a week of gains. Beazer Homes USA Inc. (BZH, Fortune 500) led the winners, adding 83 cents, or 11 percent, to $8.04. Volume builders such as Pulte Homes Inc. (PHM, Fortune 500) edged up about 1 percent.

The optimism comes as an increasing number of analysts suggest that lower prices may spur buying in 2008 after two years of steady and sometimes precipitous declines.

"Better affordability, driven by lower home prices and mortgage rates, will likely help to spur sales activity in coming months," wrote Banc of America analyst Daniel Oppenheim...

Oppenheim expects that rate to fall as low as 550,000 in some months of the current year as companies ease back from building. That helped prices in December drop 10.4 percent -- bad news short-term for homeowners and builders, but necessary to restore a balance between supply and demand.

"We expect existing inventories to continue to increase through spring, but less construction activity should begin to work down inventory later this year," he said.

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