Housing Market Continues to Improve
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The latest data from the housing market has once again highlighted the fact that a strong recovery is underway. The Standard & Poor’s/Case-Shiller index of home prices in 20 major U.S. cities climbed 0.3% in September. This is the sixth straight month of increases in home prices.
According to the Standard & Poor’s/Case-Shiller data, home prices rose in 13 cities in September compared to the prior month. Prices fell in five cities and were unchanged in the remaining two cities. David Blitzer, Chairman of the Home Price Index Committee, noted that with six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market.
Indeed, recent data from the housing market has highlighted the fact that the recovery in the housing market is gaining strength. The housing market has been helped by record low interest rates.
Given the strong recovery in the housing market, it is no surprise that homebuilders have been among the best performing stocks this year. Here’s a look at the best performing homebuilder stocks this year.
KB Home (NYSE: KBH)
Shares of the Los Angeles, California-based homebuilding company have gained more than 116% YTD. In its third quarter, which ended on August 31, KBH reported revenue of $424.5 million, which represents an increase of 16% over the same period in the previous year. The increase in revenue reflects growth in the number of homes delivered and a higher average selling price.
KBH’s backlog at August 31 stood at $744.7 million, up 33% from the same period in the previous year. The company’s potential future housing revenue in backlog, in fact, hit the highest third quarter-end level since 2008. The number of homes in KBH’s backlog rose 18% to 3,142 at August 31, 2012.
KBH reported net income of $3.3 million for the third quarter ended August 31, compared to a net loss of $9.6 million reported for the same period in the previous year.
Lennar (NYSE: LEN)
Another major gainer this year has been Lennar, the Miami, Florida-based homebuilder. YTD, LEN shares have gained more than 98%.
Lennar reported its financial results for the third quarter ended August 31 in September. The company’s net earnings for the third quarter were $87.1 million, or $0.40 per diluted share, which is significantly above the $20.7 million, or $0.11 per share it reported for the same period in the previous year. During the third quarter, LEN delivered 3,655 homes, up 28% over the same period in the previous year.
At August 31, LEN had a backlog of 4,513 homes, representing an increase of 79% over the same period in the previous year. The company’s revenue for the quarter rose 34% to $1.1 billion.
D.R. Horton (NYSE: DHI)
DHI shares have gained more than 57% YTD. DHI released its financial results for the fourth quarter ended September 30, 2012 earlier this month.
DHI reported fourth-quarter net income of $100.1 million, or $0.30 per share, compared to $35.7 million, or $0.11 per share reported for the same period in the previous year. The company’s homebuilding revenue for the quarter was $1.3 billion, representing an increase of 21% over the same period in the previous year.
For the fiscal year ended September 30, DHI reported net income of $956.3 million, or $2.77 per share, compared to net income of $71.8 million, or $0.23 per share reported for the same period in the previous year.
DHI’s backlog at September 30, was 7,240 homes, up 49% over the same period in the previous year. In dollar terms, backlog rose 61% to $1.7 billion at September 30, 2012.
PulteGroup (NYSE: PHM)
Shares of the Bloomfield Hills, Michigan-based homebuilder have gained more than 174% YTD.
PHM released its most recent quarterly results (quarter ended September 30, 2012) last month. PHM’s net income for the quarter stood at $117 million, or $0.30 per share, compared to a net loss of $129 million, or $0.34 per share reported for the same period in the previous year.
The company’s revenue from home sales totaled $1.2 billion, representing an increase of 12% over the same period in the previous year. The increase was driven by a 6% increase in average selling price and a 5% increase in closings.
PHM had a backlog of 7,686 homes at September 30, 2012, up 49% over the same period in the previous year. In dollar terms, the backlog at September 30, 2012 was $2.2 billion, compared to $1.4 billion at September 30, 2011.
Hovnanian Enterprises (NYSE: HOV)
HOV shares have gained 280% so far this year. The Red Bank, New Jersey-based homebuilder reported its most recent financial results (Q3-quarter ended July 31, 2012) in September. Net income for the quarter was $34.7 million, or $0.25 per share, compared to net loss of $50.9 million, or $0.47 per share reported for the same period in the previous year.
The company’s total revenue for the quarter was $387 million, compared to $285.6 million reported for the same period in the previous year.
HOV’s backlog at July 31, was 2,452 homes, with a sales value of $813.9 million.
Homebuilders’ Rally to Continue
The housing market continues to show signs of a robust recovery. As the housing market continues to recover, homebuilder stocks could extend their gains into next year. Any pullback in homebuilder stocks, therefore, should be seen as an excellent buying opportunity.
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