New Home Sales Not the Only Reason for the Bullish Housing Market
In June 2016, existing home sales reached an annualized ~5.6 million. In May, existing home sales were ~5.5 million.
The NAHB Wells Fargo Housing Market Index peaked at 71 during the height of the housing bubble in late 2005.
Overall, permits for single-family residences rose slightly from 731,000 to 738,000. Multifamily permits rose from 389,000 to 405,000.
In June 2016, housing starts rose from 1.1 million to ~1.2 million. We also saw increases in both single-family and multifamily starts.
Like most of the other builders, D.R. Horton (DHI) has been reporting lower gross margins due to sticker shock.
D.R. Horton (DHI) reported net income of $294.8 million, or $0.66 per share, for 3Q16.
D.R. Horton (DHI) sounded relatively optimistic on its conference call. It was clearly happy with the most recent quarter despite the stock price reaction.
D.R. Horton (DHI) reported 3Q16 revenue of $3.1 billion, a 10% increase on a YoY (year-over-year) basis and a sequential increase of ~17%.
PulteGroup announced the second phase of its value creation strategy—reducing costs, reducing land investment, and increasing share buybacks.
PulteGroup (PHM) reported net income of $118 million or $0.34 per share. This beat Wall Street analysts’ estimate of $0.33 per share.
PulteGroup’s (PHM) gross margins for 2Q16 came in at 21.5%—down 40 basis points year-over-year and 180 basis points from the fourth quarter.
PulteGroup (PHM) reported 2Q16 revenues of $1.8 billion—a 41% increase from a year ago. Revenues increased in home sales and financial services.
Fannie Mae’s monthly National Housing Survey asked respondents if it’s a good time to buy and sell a house. They’re more confident that it’s a good time to sell.
In May, the total foreclosure inventory fell 25% from a year ago to 390,000 homes. It takes us back to the levels in late 2007.
Last week, stocks rallied and bond yields rose as investors became more sanguine about the consequences of the Brexit.
This week is relatively data-light. However, a slew of reports will interest real estate investors.
In May 2016, there were 5.5 million job openings—up 2% YoY (year-over-year). This is the lowest print since February.
Job cuts in the energy industry seem to be slowing as they fell 42% YoY. The real estate sector, especially home construction, is on an upswing.
Given the terrible growth in payrolls, we might see more flattening of wage inflation back towards the current inflation rate.
In June 2016, non-farm payrolls rose by 287,000. Non-farm payrolls easily topped Wall Street analysts’ estimate of 180,000.