Homebuilder stocks rose last week after a Census Bureau report indicated increased home sales in October 2009, compared to September 2009 and October 2008. Median home prices continued to increase for the seventh consecutive month, according to the S&P/Case-Shiller Index. For more on this, see the following article from The Street.
Home sales spiked 6.2% in October to 430,000, according to a new report from the U.S. Census Bureau and the Department of Housing and Urban Development — news that sent the stock price of most of the major homebuilders on an upswing Wednesday morning.
The new-home sales numbers not only beat the September level of 405,000 home sales, but were also 5.1% above the October 2008 level of 409,000.
While recent housing industry reports showed a slow in new housing starts in October , the rush among first-time homebuyers, with the tax credit expiration looming last month, could have spurred additional sales.
There was also positive news about the median home price increasing for the seventh-consecutive month released yesterday by the S&P/Case-Shiller index family.
The median sales price of new houses sold in October 2009 was $212,200; the average sales price was $261,100, according to the Census Bureau report.
Homebuilders didn’t benefit from Tuesday’s S&P/Case-Shiller index improvements, but the Census Bureau data seemed to cause a multiplier effect.
The homebuilder spike was led by D.R. Horton(DHI Quote), which was up 1% at mid-day, a welcome change for the stock after the pummeling it took last week on weak earnings.
Skyline(SKY Quote) was up 4.5%; Hovnanian Enterprises(HOV Quote) was up 2%; while KB Homes(KBH Quote), M.D.C. Holdings(MDC Quote), and Pulte Homes(PHM Quote) were all trading up slightly at mid-day.
While the positive gains were small for many of the homebuilders, a broadly positive trend is welcome news for the beleaguered sector.
Only two major names in the sector were down at mid-day: The stock price of he Ryland Group(RYL Quote) was down 0.6%; while luxury homebuilder Toll Brothers(TOL Quote) was down 0.3%.
It was just a few weeks ago that a better-than-expected outlook from Toll Brothers sent the entire sector up.
Today, instead of leading the industry surge, Toll was missing out on it.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.