NEW YORK (Thomson Financial) - The homebuilding sector traded broadly higher
Monday as the sector once again erased early sharp declines suffered after the
release of disappointing housing data.
The iShares DJ U.S. Home Construction ETF (ITB) rallied 4.5% to $18.80, will
17 of 21 components trading higher. Earlier in the session, the ITB was down as
much as 6.6%, will all components trading in negative territory at one point.
Among the home builder sector tracking stock's most heavily-weighted
components, Pulte Homes Inc. climbed 3.5% to $13.56, D.R. Horton Inc. added 1.1%
to $15.60, NVR Inc. tacked on 1.5% to $601.63, Centex Corp. hiked up 6% to
$27.97, Toll Brothers Inc. gained 3% to $22.11 and Lennar Corp. rose 6.5% to
$18.09.
The U.S. Commerce Department said earlier that December new home sales fell
4.7% to a seasonally-adjusted annual rate of 604,000 units, the lowest rate seen
since February 1995, and below the median estimate of economists surveyed by IFR
Markets of a slight drop to a 645,000 annual rate.
Banc of America Analyst Daniel Oppenheim said that he expects new homes
sales to drop further -- as low as 550,000 in some months in 2008 -- and that
the median home prices decline reported by the Census Bureau may be understating
the real decline because it doesn't account for the use of incentives. "However,
better affordability, driven by lower home prices and mortgage rates, will
likely help spur sales activity in coming months," Oppenheim said in a research
note.
Last Thursday, after the National Association of Realtors said sales of
existing homes fell 2.2% to a 4.89 million annual rate, compared with economist
forecasts of 4.95 million, the ITB fell as much as 3.1% in intraday trading
before recovering to close up 0.6%.
Tomi Kilgore
tk1
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