The Zacks Analyst Blog Highlights: D.R. Horton, Berkshire Hathaway, Masco, USG and PPG Industries - Press Releases
December 27 2011 - 3:30AM
Zacks
For Immediate Release
Chicago, IL – December 27, 2011 – Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include D.R. Horton (DHI),
Berkshire Hathaway (BRK.B),
Masco (MAS), USG (USG) and
PPG Industries (PPG).
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Friday’s Analyst
Blog:
New Home Sales Up Slightly
New Home Sales rose by 1.6% in November from October, to a rate
of 315,000. Relative to a year ago, sales are up 9.8%. While the
monthly increase is more than welcome, it is still a very dismal
rate of new home sales.
There was a upward revision to the October numbers of 3,000 from
310,000. The November level was also somewhat better than the
expected rate of 315,000. Regardless of the changes at the edges,
this is still a very bad level. The 19 lowest months on record
(back to 1963) for new home sales have all been in the last 19
months.
New home sales have only exceeded the 400,000 level three times
since September 2008 when the financial markets collapsed. The most
recent time was in April 2010, as sales were inflated by the rush
to get in under the wire and collect the homebuyer tax credit.
Sales collapsed after that.
Relative to the peak of the housing bubble (7/05, 1.389 million),
new home sales are down 77.3%. Prior to September 2008, there had
only been 20 months in which new home sales were below the 400,000
level, with the most recent being in 1982 (which was a time of a
very nasty recession brought on by sky-high interest rates
inflicted by the Fed to break the back of inflation).
New home sales fall sharply before all recessions (with the
exception of the dot.com bust, which caused recession of
2001) and then start to increase sharply in the middle of, or
towards the end of, the recession. That clearly is not happening
this time around. New home sales are vital to the overall
economy. If new homes are not selling, then home builders have no
reason to build more of them. After all, that is very expensive
inventory to sit on.
Unlike used home sales, each new home built creates a huge amount
of economic activity. Not only are low new home sales bad for the
big homebuilders like D.R. Horton (DHI),
but also for all the companies that make the products and supplies
that go into making a new house. They range
from Berkshire Hathaway (BRK.B) for
bricks, roofing materials and insulation
to Masco (MAS) for plumbing fixtures and
cabinets to USG (USG) for wallboard
to PPG Industries (PPG) for glass and
paint.
In terms of employment, it is not just all the roofers and framers
that lose jobs due to weak new home sales, but employees at all the
firms that make the stuff that goes into making a new home. Of
course, if those employees are out of work, they are not spending
on other goods and services, dragging down a host of seemingly
unrelated businesses.
Not that the direct impact of construction jobs should be
underestimated. Since the recession started, 34% jobs lost have
come from the construction industry.
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BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report
D R HORTON INC (DHI): Free Stock Analysis Report
MASCO (MAS): Free Stock Analysis Report
PPG INDS INC (PPG): Free Stock Analysis Report
USG CORP (USG): Free Stock Analysis Report
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