Wednesday, everything seemed so right with D.R. Horton (DHI). Analysis had revealed a high quality, well-managed company. Then the excellent industry news ramped up sales and earnings expectations. Thursday morning, sure enough, Horton announced that it not only beat the average EPS estimate by 24%, but also exceeded the top of the analyst estimate... »
Outstanding homebuilder industry sales and pricing news for June was just released, yet homebuilder stocks so far have not reacted. The news is exceptionally good because expectations have been so negative (i.e., the “surprise” factor is high). With this proof that new homebuyers are undeterred by the higher mortgage fixed-rates, we would expect the... »
Typical of many warnings being proffered to investors these days, Michael Santoli (formerly at Barron’s and now with Yahoo! Finance) has written Retail Investors Should Lower Expectations. He cites many reasons to be cautious and expect lower returns from “nearly all” asset classes. I’ve found Michael’s writings to be well-done. However, I believe his... »
The good news continues for both the housing market (demand and prices up, foreclosure supply diminishing) and homebuilders (activity and confidence up). Real estate has become desirable again, spurring buyers, investors and lenders. The only “bad” news has been higher fixed mortgage rates. In 2 Reasons Rate Rise Makes Homebuilders A Buy, I discussed... »
In 2 Reasons Rate Rise Makes Homebuilders A Buy, I described how rising interest rates will likely boost home sales, not weaken them. Two important forces could be unleashed by a rate uptrend. First, potential home buyers can be influenced to act sooner, thereby avoiding higher mortgage rates later. Second, banks, seeing an increase... »
