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The Commerce Department has just shown a report that new home sales for the month of September turned south. This may increase the call for that first time home buyer $8,000.00 tax credit, but it also highlights that housing prices are not going to rocket higher and highlights just how sensitive the home-buyer sector of the economy is with or without a tax handout. The report came in at 402,000 annualized units, down from the 417,000 annualized number for August and very far under the 440,000 expected according to Dow Jones and under the 440,000 expected from Bloomberg. We are watching the SPDR S&P Homebuilders (NYSE: XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) ETFs fall in response. DR Horton Inc. (NYSE: DHI) and Lennar Corp. (NYSE: LEN) are two of the hardest hit housing stocks today after the news.
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Posts for Ticker ‘XHB’
New Home Sales Highlight Softness (XHB, ITB, DHI, LEN)
Home Builders Already Cautious, Get More Cautious (XHB, ITB)
The prior data out of the National Association of Home Builders had been improving for three consecutive months. New data for October came out today showing that the index slipped. The problem with already seeing a slip is that the home builder confidence was never really back in the first place. This response was from some 493 builders around the nation. We are watching the SPDR S&P Homebuilders (NYSE: XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) ETFs fall in response.
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Are Housing Gains A Sham? (XHB, ITB, URE, HD)
This morning’s July data for existing home sales, or used homes, posted another gain and this makes it the fourth consecutive month, according to the National Association of Realtors. This created more excitement in the markets and in everything tied to property. The SPDR S&P Homebuilders (NYSE: XHB) is up 3.9% at $15.38 and the iShares Dow Jones US Home Construction (NYSE: ITB) is up 4.7% at $13.13. Even the Ultra Real Estate ProShares (NYSE: URE), which seeks pre-fee and pre-expense moves of twice the daily performance of the Dow Jones U.S. Real Estate index, is up big by 6.1% at $5.78 despite this not being an apples-to-apples comparison. It is easy to point to figures for support or contradiction to any trend, but in reality we want to see if this excitement is real or if this is just another temporary sham in housing.
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Top Day Trader Alerts (JASO, GRMN, YRCW, JAZZ, MEDX, BMY, PETD, TOL, XHB, BRCM)
These are this morning’s top day trader alerts and most active in price and volume. We have more detailed analysis and data on price and volume with links through to each at VSInvestor.com:
JA Solar Holding Co. (NASDAQ: JASO) is down close to 10% after poor results.
Garmin Ltd. (NASDAQ: GRMN) is down over 5% on a key analyst downgrade.
YRC Worldwide, Inc. (NASDAQ: YRCW) was down over 7% on an analyst downgrade.
Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) was up almost 20% on an unexpected profit.
Medarex Inc. (NASDAQ: MEDX) is seeing very unusual merger arb volume after the Hart-Scott-Rodino merger review period for the Bristol-Myers Squibb (NYSE: BMY) buyout has expired.
Petroleum Development Corporation (NASDAQ: PETD) is down 5% and will be an exponential volume mover on the secondary offering.
Toll Brothers (NYSE: TOL) has some sales gains data that is strong enough to lift the SPDR S&P Homebuilders (NYSE: XHB).
This was not seen until a post-close review, but Broadcom Corp. (NASDAQ:BRCM) was seeing some very unusual PUT OPTIONS TRADING yesterday.
JON C. OGG
AUGUST 12, 2009
Homebuilders Look Less Depressed in Survey (XHB, ITB)Homebuilders Look Less Depressed in Survey (XHB, ITB)
It looks like the NAHB survey of homebuilders are again feeling a bit “less-bad” than in recent surveys. The survey for July shows a reading of 17, up from 15 in June. The boost reflects more confidence in new single-family housing, but the building community is still concerned about jobless data and unemployment. The homebuilder ETFs, the SPDR S&P Homebuilders (XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) are up but have not shown any sharp reactions to the news.
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Questionable Confidence Among Builders (XHB, ITB)
The confidence among home builders looked like it was creeping higher, but the most recent data from the National Association of Home Builders showed a decrease in June. This drop put the index down to 15 for June from 16 in the survey. There were hopes that we were going to have our third consecutive gain in the index. That was not in the cards. The SPDR S&P Homebuilders (NYSE: XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) ETF’s are staying down on the news.
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Slightly Good News From Homebuilder Earnings (HOV, TOL, XHB)
Traders are lightly selling Hovnanian Enterprises Inc. (NYSE: HOV) and Toll Brothers Inc. (NYSE: TOL) after the two homebuilders reported earnings between yesterday’s close and this morning’s open. The news is also impacting the SPDR S&P Homebuilders (NYSE: XHB) on a lesser basis.
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Stat of the Day: 1 Million Foreclosures Already in 2009 (XHB)
The Center for Responsible Lending estimates that there have now been 1,000,000 foreclosures filed so far in 2009. It also noted that the Mortgage Bankers Association’s most recent data shows some 12% of all mortgages are delinquent. It gets worse. The group expects this 2009 foreclosure number to more than double.
This is not likely to kill the SPDR S&P Homebuilders (NYSE: XHB) with its ETF shares still up 3% at $12.47, but it is also unlikely to give any great credit to the notion that housing is going to make a screaming return out of the blue. Imagine what this does to the phantom housing inventory when you include the properties which banks are holding off the market for months.
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Notions of Housing Recovery Only Seem Relative To Price (XHB)
The Commerce Department data for April’s new home sales looks good on the surface, but there are perhaps more problems than there are winners here. On an annualized basis, there were 352,000 new homes sold, a 0.3% gain. Technically, this is growth, but it is also under the 365,000 consensus estimate. There was also a revision to the March data down to 351,000, which means that the -0.6% originally reported was really a -3.0% reading.
Pending Home Sales Show Great Comfort (XHB)
If you are an investor or a buyer in the market for a new home or if you are a homebuilder, there may be some good news after waves and waves of bad news and then “less-bad news.” The National Association of Realtors said that pending home sales have risen with many new first-time homebuyers taking advantage of the affordability of housing. Pending Home Sales rose by 3.2% in March, 2009 to 84.6. This compares to 82.0 in February and 83.7 in March, 2008. This has the SPDR S&P Homebuilders (NYSE: XHB) screaming on the news.
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Case-Shiller: Just Being Less Poor In Housing Prices (XHB)
There is some good news on the housing front, although this “good news” may only be a relative issue and we are having to go back to February in this data. The S&P/Case-Shiller home-price index for February did stay on path for its never-ending slide, but the good news is that the record declines were broken after 16 months. The report showed that 15 of the 20 major metropolitan areas posted average sale price declines of 10% or more and housing prices on a national average look more similar to 2003 levels. The SPDR S&P Homebuilders ETF (NYSE: XHB) is down 1.4% at $13.37 so far this morning.
Homebuilder ETFs Run On Housing Data (XHB, ITB)
The new home sales data is showing a very mixed bag, with a bit of a positive twist to it. We are seeing a run up in the SPDR S&P Homebuilders (NYSE: XHB) and the iShares Dow Jones US Home Construction (NYSE: ITB) as a result. March 2009 new home sales came in at a rate of -0.6% down to 356,000 on an annualized basis. We had consensus estimates pegged at 337,00 from Dow Jones and 330,000 from Bloomberg. February was given a sharp revision to its already high +4.7% to a higher +8.2%.
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Looking for Next Homebuilder Merger? (DHI, TOL, NVR, MDC, LEN, KBH, RYL, MTH, HOV, MHO, SPF, XHB, ITB, PKB)
We won’t bother telling you about the homebuilder merger this morning, because we already covered it once. But in a down and out sector, you will see that traders are looking to see if there will be other mergers in the battered group. As you will also see, the lower market cap stocks are the ones where traders are guessing as to which will be the next take-out candidate. Our cut off was a $100 million market cap as of yesterday and every stock in the sector that we track in the U.S. is higher.
DR Horton Inc. (DHI)….. $3.5B; +5.8% at $10.78
Toll Brothers Inc. (TOL). $3.1B; +4.5% at $18.86
NVR Inc. (NVR)……….. $2.6B; +4% at $6.86
MDC Holdings Inc. (MDC).. $1.5B; +4.5% at $30.95
Lennar Corp. (LEN)……. $1.2B; +11% at $7.98
KB Home (KBH)………… $1.1B; +6% at $14.30
Ryland Group Inc. (RYL).. $728.8M; +6% at $16.80
Meritage Homes Corp(MTH). $401.3M; +7.3% at $12.99
Hovnanian (HOV)………. $125.0M; +11% at $1.72
M/I Homes, Inc. (MHO)…. $121.7M; +2.2% at $8.72
Standard Pacific (SPF)… $100.6M; +11% at $1.00
Oddly enough, the SPDR S&P Homebuilders (NYSE: XHB) ETF is only up almost 4% at $11.37. The other ETF, the iShares Dow Jones US Home Construction (NYSE: ITB) is up 3.5% at $9.25. This is a slightly different ETF, but the PowerShares Dynamic Building & Construct (NYSE: PKB) is up 1.3% at $9.65 on very thin volume.
JON C. OGG
Pulte-Centex Create Major Homebuilder Merger (PHM, CTX, XHB)
Pulte Homes, Inc. (NYSE: PHM) is acquiring Centex Corporation (NYSE: CTX) in a stock-for-stock transaction valued at $3.1 billion, including $1.8 billion of net debt. The deal has been unanimously approved by both boards of directors. This is a deal which came out of nowhere, at least as far as the speculation game would have indicated. Centex common holders will receive 0.975 shares of Pulte common stock for each share, and as April 7, 2009 the transaction has a value of $10.50 per Centex share. This represents a pre-dilution premium of 32.6% to the 20-day volume weighted average trading price of Centex’s shares.
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Homebuilder ETF’s Hope This Is A Bottom (XHB, ITB)
There was another positive number on new home sales data for the month of February. It looks like new home sales came in UP 4.7% at 337,000 annualized units. The SPDR S&P Homebuilders ETF (NYSE: XHB) is up 7% at $11.51 and the iShares Dow Jones US Construction ETF (NYSE: ITB) is up over 7% at $9.54.
This is much better than the estimates of about 300,000 annualized units. The Commerce Department also signaled that the revision is still very negative compared to a year-over-year basis but the revision for January is now 322,000 annualized units from 309,000 annualized units that was originally reported. These are better than expected, but they are still dismal compared with historic sales and the numbers are so low that you may wonder about the celebration.
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Ryland & Shrinking Homebuilder Credit (RYL)
You probably already figured that the increase in existing home sales was due to foreclosure, pre-foreclosure, and other distressed sales. Today, Ryland Group Inc. (NYSE: RYL) had an interesting SEC Filing. While many companies are trying to get access to credit, this homebuilder amended its existing revolving credit facility. Just keep in mind that this was likely at the request of JPMorgan Chase and its other lenders.
Standard Pacific Looking To Raise Capital (SPF, XHB)
Standard Pacific Corp. (NYSE: SPF) is doing something some might not expect out of a homebuilder. It filed to raise up to $600 million by issuing securities and debt to fund the development or purchase of residential properties, acquire other homebuilders, or pay existing debts.
In an SEC Filing it disclosed that some 60% of its net deliveries for 2007 have come from the three troubles real estate markets of California, Florida, and Arizona. As of September 30, 2007, Standard Pacific had roughly $26.9 million in cash and $416.4 million in long-term investments. It also carried some $2.849 Billion in property, plant, and equipment. Its total assets carried were listed as $4.0299 Billion. It also listed $2.1 Billion in long-term debt and total liabilities were carried as $2.598 Billion.
Frankly, we see the potential dilutive nature of this would-be securities offering as a welcome sign despite what would have been a red flag during good times. This will show if the company can raise funds for itself, maybe the worst in housing has been seen.
Yesterday we noted how the SPDR S&P Homebuilder (AMEX: XHB) ETF had recovered some 50% and showed that perhaps the worst has been seen in the sector. Just a month or so ago, many of these homebuilders looked like some might go to zero. Lehman Brothers also initiated coverage on the larger stocks in the group just this morning.
The California homebuilder is up 5% or $0.26 in mid-day trading to $5.24 and the 52 week range is $1.47 to $26.56.
Jon C. Ogg
February 27, 2008
Did Homebuilders Finally Bottom? (DHI, TOL, LEN, CTX, HOV, BZH, XHB)
If you have been watching homebuilders of late, you’ll notice a sharp disconnect between the headlines still coming out and the stock prices of many homebuilders. The move today is partly attributed to Sam Zell’s interview on CNBC saying this spring should mark the bottom in housing. The SPDR S&P Homebuilders (AMEX: XHB) ETF shares are up 6.3% at $22.56 today, and its 52-week low is $15.22.
Keep in mind that Zell has that Gafisa SA (NYSE: GFA) as one of his big plays in Brazil, which we recently noted as one of Jim Cramer’s top picks in Brazil. We have also noted how many of these stocks had doubled from lows. Banc of America recently was the first to upgrade several of these in the homebuilder sector as well.
Today, shares of these are up big, which you can see in comparison to their 52-week lows:
Stock/Symbol Trade Change 52-wk Range Market Cap
DR Horton (DHI) $16.44 +6.06% $9.78-27.26 $5.18B
Toll Bros (TOL) $23.24 +6.02% $15.49-32.00 $3.68B
Lennar (LEN) $20.40 +8.63% $11.98-51.43 $3.26B
Centex (CTX) $26.10 +9.53% $17.77-49.85 $3.19B
Hovnanian (HOV) $10.91 +10.20% $4.25-33.32 $679.76M
Beazer (BZH) $8.74 +12.48% $4.53-42.42 $342.68M
We have noted over and over that this sector would bottom and start to recover long before the news starts to look like anything resembling good news. That may or may not be now, but when you see an ETF recover 50% from lows you have to wonder how much worse things would have to get for that recovery to not at least partially hold up. At one point, things were getting so bad we even asked "which would hit zero first?"
We still expect more bad headlines with no end in clear site. But a 50% recovery in an ETF that measures a sector has to be telling you something, even if there will be more bad days on and off and even as more headlines still look bad.
Jon C. Ogg
February 26, 2008
Many Homebuilders Up 100% From Lows (MTH, PHM, LEN, WCI, SPF, HOV, XHB)
Everyone knew homebuilders would turn one day and when they turned it would be fast and in a flurry of buying volume. Much of this may attributed to short covering, but much is because the good old Fed and another 125 basis points in rate cuts within a 10-day period. You know you can’t pay attention to the headlines on home sales or even the earnings out of these, because that is dismal. But traders are taking aim here. In fact some of these are up 100% off of lows already.
- Meritage Homes (NYSE: MTH) up 12% at $15.26, up over 100% from lows; 52-week range $7.04 to $46.65.
- Pulte Homes (NYSE: PHM) up 14% at $15.52, up over 80% from lows; 52-week range $8.20 to $35.56.
- Lennar (NYSE: LEN) up 8% at $19.70, up over 60% from lows; 52-week range $11.98 to $56.54.
- WCI Communities (NYSE: WCI) up 14.5% at $5.98, up over 200% from lows; 52-week range $1.35 to $24.20.
- Standard Pacific Corp. (NYSE: SPF) up 22% at $3.78, up over 100% from lows; 52-week range $1.47 to $30.52
- Hovnanian Enterprises Inc. (NYSE: HOV) up 10% at $9.68, up over 100% from lows; 52-week range $4.25 to $37.58.
We even ran the key ETF for the sector. The SPDR S&P Homebuilders (AMEX: XHB) is up over 8% today to $22.10. But even this is up almost 50% from the recent lows; 52-week trading range $15.22 to $40.03. That low was just on January 9, 2008.
There are many other names that were equally charged. But these were the ones that fir the screen today.
Jon C. Ogg
January 31, 2008
Which Homebuilder Stock Goes To Zero First? (XHB, DHI, TOL, LEN, PHM, CTX, NVR, KBH, MDC, RYL, HOV, BZH)
Everyone keeps predicting one or more of the large US Homebuilders is going to implode because of their overbuilding and inability to sell new units at their old highly profitable margins. Most of these have large land bank losses from property options being written off. inventories are through the roof, no pun intended. Well, you’ve seen and heard the news.
What we wanted to do was show a list of the old major homebuilders to show how the stocks have sold off over the last year and even how low the market caps have become in the sector. Dubai has signaled it wants to buy into a homebuilder, and that was before Abu Dhabi injected $7.5 Billion into Citigroup.
Measuring stock price alone is no way to judge, but looking at the sell-offs from the recent highs may be a judge. Some are down more than 80% from their 52-week highs.
Tick PRICE CHANGE $52-WEEK MKT-CAP
DHI $10.23 (-$0.35; -3.31%) $10.46-31.13 $3.22B
TOL $18.12 (-$0.01; -0.06%) $18.12-35.64 $2.84B
LEN $14.08 (-$0.42; -2.90%) $14.50-56.54 $2.26B
PHM $8.92 (-$0.24; -2.62%) $9.00-35.56 $2.28B
CTX $17.93 (-$0.45; -2.45%) $18.34-58.42 $2.18B
NVR $442.59 (+$8.59; +1.98%) $398.96-851.96 $2.27B
KBH $18.65 (-$1.00; -5.09%) $19.61-56.08 $1.92B
MDC $32.15 (-$0.40; -1.23%) $32.49-60.34 $1.47B
RYL $19.76 (-$0.26; -1.30%) $19.97-60.13 $831.58M
HOV $6.95 (+0.02; +0.29%) $6.92-38.66 $432.32M
BZH $7.12 (+0.15; -2.06%) $7.06-48.60 $279.16M
We aren’t going to make a determination yet as to which ones will live and which ones will bite the dust. Unfortunately you can’t even trust the balance sheets right now because there is simply no way to calculate the off-book transactions, the value writedowns that each will fess up to, and how many of these homes that were juiced-up and sold above market with rebates and incentives that some of the builders will ultimately have to take back at some point in the future.
At least one or some will likely fail. History would dictate that some cannot survive the malaise if it continues at this rate. Ultimately, some will thrive after this dust storm settles. But "ultimately" can be a long ways off.
If you noticed the news this morning you saw a 4.5% decrease in housing prices in Q3 2007 over Q3 2006, and that was after a 2.2% decrease in Q2. There is no price rebound expected in 2008, and foreclosures are expected to rise as well.
The SPDR S&P Homebuilders ETF (AMEX:XHB) shares are down 0.8% at $17.05 late in the day.
DR Horton (DHI), Toll Brothers (TOL), Lennar (LEN),Pulte (PHM), Centex (CTX), NVR Inc. (NVR), MDC Holdings (MDC), Ryland (RYL), Hovnanian (HOV), Beazer (BZH)……
Jon C. Ogg
November 27, 2008
24/7 Wall St. has an open email distribution list with other similar briefs and stories where we summarize and preview data for those interested. It is usually sent out two to three times per week.
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