PulteGroup Inc

The average 30-year fixed-rate mortgage rose 12 basis points as the ten-year yield rose 10 basis points, and TBAs sold off. With the refinance boom over, originators are overstaffed.

In the latest survey, consumers expect home prices to rise by 2.9% over the next 12 months. This is flat month-over-month and down 100 basis points year-over-year.

For the second quarter, Lennar reported $1.64 billion in revenues. This is an increase of 29% year-over-year. Homebuilding revenues increased 28%, to $1.6 billion from $1.3 billion in the second quarter of 2013.

Housing has been a bright spot in the US economy. But over the past month, housing stocks haven’t been performing well. ITB, a housing-focused fund, has fallen 4.7%.

The average 30-year fixed-rate mortgage was flat at 4.17%, as the ten-year yield rose 1 basis point, while TBAs rallied. With the refinance boom over, originators are overstaffed

The jobs report should have gone out last Friday. But the BLS decided to postpone it until this Friday, May 8. Unless the report is unusually good, the bond market will probably take it in stride.

Do we need a new New Deal? Construction spending doesn’t have to be simply residential (or private construction). Public construction also matters (however, it’s less than half of private construction dollars). The use of federal construction dollars to increase demand in the economy has been an issue of tremendous debate, with one side believing that […]

Construction spending is just off its post-recession high, but it’s still depressed—current levels equate to mid-2003 spending levels—construction spending peaked at $1.2 trillion in March, 2006.

Unlike some of the other builders, KB is a turnaround story. The company believes its strategic focus on first-time and move-up homebuyers is finally beginning to pay off.

The 2.3% home price expectation is much lower than the 6%–7% forecast we’re seeing out of the National Association of Realtors and the mid single-digit forecast we’re seeing from most Wall Street professionals.

Like most other builders, D.R. Horton has been reporting lower gross margins due to sticker shock. Home prices have been increasing, but wage growth has been stagnant.

In June 2016, private construction fell 0.6%, and public construction fell 0.6% month-over-month.

Mortgage rates are the lifeblood of the housing market, which is why the Fed began conducting quantitative easing (or QE) in the first place. Lower rates allow homeowners to refinance.

The Richmond Fed Manufacturing Survey looks at business conditions in the Fed’s fifth district, which covers Washington, DC, Baltimore, Richmond, and Charlotte.

Since foreclosures represent a process that may or may not wind up with the bank owning the home, foreclosure completions are a better indicator of foreclosure activity than foreclosure starts.

This report will probably hold the hawks on the Fed at bay and allow them to continue to maintain ultra-low interest rates. The Fed wants to see annual inflation of about 2%.

New home sales jumped 11.6% in December from a month ago to a seasonally adjusted annual rate of 481,000.

D.R. Horton’s EBITDA margin was at 10.1% as on March 2015, much better compared to 2.3% for fiscal 2011.

Foreclosure starts are closely watched by investors, realtors, and homebuilders alike because they forecast future housing supply.

Average hourly earnings fell by 1 cent on a month-over-month basis in December 2015 and were up 2.5% year-over-year to $25.24. Average weekly hours were flat at 34.5.

D.R. Horton’s gross margins held steady at 19.9% in the fourth quarter of 2015. However, they fell on a YoY (year-over-year) basis from 20.5% in the fourth quarter of 2014.

The average 30-year fixed-rate mortgage decreased six basis points to close at 3.92%. The ten-year bond rose and yields decreased by 15 basis points.

The Index of Leading Economic Indicators (or LEI) is a business cycle indicator. It’s based on 11 different economic statistics—average workweek, initial jobless claims, new orders, building permits, unfilled durable goods, commodity prices, consumer expectations, stock prices, and money supply.

D.R. Horton CEO Donald Tomnitz said that the first-time homebuyer will drive the next leg in the sector and has been underserved in this recovery.

Housing starts fell from a downward-revised ~1.16 million to ~1.13 million in August 2015. This was below Wall Street estimates of just over 1.16 million.

There was no discussion of the “speed limit” issue in the July FOMC minutes. This is generally a “cyclical versus structural unemployment” issue.

Inflation represents a rise in the general price level in a country or region. The higher the inflation, the lower the quantum of a particular good that can be purchased.

The MBA Purchase Index decreased 6.9% in the week ended December 12, 2014, despite a strong bond market rally.

The homeownership rate rose precipitously during the housing bubble. This was due to several reasons.

ETFs present another investment avenue. Apart from pure homebuilder ETFs, there are many other ETFs that offer exposure to homebuilders.

Between low prices and low borrowing rates, the first-time homebuyer should have been set. However, lenders greatly tightened credit standards and many first-time homebuyers found themselves shut out of the mortgage market.

Housing starts are a critical predictor of future homebuilder sales Housing starts are released jointly by the Census Bureau and the Department of Housing and Urban Development. Analysts use the information to anticipate future production for homebuilders, future demand for raw materials, and labor costs. This data will even affect the forecasts for home-related retailers, […]

Historically, the use of public construction dollars has been the big lever that the government uses to stimulate the economy. This dates back to the New Deal.

Up until January, industrial production and manufacturing production had been accelerating, so it is premature to draw any major conclusions from one disappointing report.

In July, home prices increased 0.1% month-over-month. They’re up 4.4% year-over-year (or YoY). Prices are now within 6.5% of their April 2007 peak. They correspond to the levels in July 2005. Real estate values drive consumer confidence and spending. They have an enormous impact on the economy.

Zoning is the way that governments supervise land development and the kinds of uses each individual property may be directed toward for the public interest.

Historically, construction spending has led economies out of a recession.

The National Association of Homebuilders (NAHB) Sentiment Index came in at 58—the highest reading since July 2005, and only the third time since the bust that more homebuilders considered conditions to be more “good” than “poor.”

The MBA Purchase Index decreased 2.6% last week in response to strong bond market sell-off and a holiday-shortened week. We’re entering the seasonally slow period for the real estate sector, which pretty much lasts as long as football season.

Manufacturing output fell 0.8% after increasing 0.3% in December. The output for utilities rose 4.1% in January on cold weather in the Northeast.

The Richmond Fed Manufacturing Survey looks at business conditions in the Fed’s fifth district, which covers Washington, DC, Baltimore, Richmond, and Charlotte The Richmond Fed Manufacturing Survey is sent out to companies in the Mid-Atlantic states and covers current business conditions, shipments, new orders, backlog, and inventory. It’s similar to the other surveys put out […]

Inflation is a double-edged sword. The Fed (or Federal Reserve) likes to see a little inflation because it’s associated with rising wages. But deflation causes a lot of economic problems, especially for the Fed.

Following the collapse, we saw starts average around 687,000 units per year, with a low of under half a million.

Manufacturing activity is a good sign for job growth, which has been the Achilles’ heel of this recovery. Although manufacturing isn’t the driver of the economy that it used to be, it still matters.

The NAHB Wells Fargo Housing Market Index measures homebuilder sentiment has been increasing steadily since 2009. Recently, it’s started to accelerate.

The Thomson Reuters/University of Michigan Consumer Confidence Index is a leading indicator for the U.S. economy The Thomson Reuters/University of Michigan Consumer Confidence Index is an important indicator of the consumer’s perception of the U.S. economy. Similar to other consumer confidence measures, it asks consumers about their views on the current economic conditions and their […]

For 2Q16, KB Home reported revenues of $811 million, which easily topped the Wall Street estimate consensus of $750 million. Revenues increased by 30% YoY.

Yesterday, the Federal Reserve ended its March FOMC meeting and decided to continue to reduce asset purchases.

Over the past several months, mortgage rates and the ten-year bond yield stopped correlating. Last week, this trend broke as the two variables lined up once again.

Credit eased during the quarter, but it was primarily associated with commercial real estate and commercial or industrial lending.

The return of the first-time homebuyer is the missing link to a more normal housing market. Household formation numbers have been depressed since the Great Recession began.

Given that the first-time homebuyer is still in a difficult financial situation with a weak job market and high student loan debt, homebuilders are focusing more on the move-up buyer.

Builders noted the shutdown and the impending debt ceiling have depressed consumer confidence, and this is flowing through to traffic.

The Pending Home Sales Index (PHSI), a proprietary index from the National Association of Realtors based on contract signings, fell 1.5%, to 107.7 in August from 109.4 in July.

The recent bond market sell-off bumps up mortgage rates again Mortgage rates are the lifeblood of the housing market, which is why Bernanke and the Fed began conducting quantitative easing (or QE) in the first place. Lower rates allow homeowners to refinance, which increases their disposable income and helps stimulate economic growth. Lower rates enable first-time home […]

Lennar showed mixed results compared to its peers based on the PE and PBV ratios. The ETFs outperformed Lennar based on the PE and PBV ratios.

We do have some important economic data this week—personal income and spending, the third revision to first quarter GDP, and construction spending.

The housing market, especially construction, has been a cause of concern to policymakers in the Federal Reserve.

For the first quarter of 2015, Lennar (LEN) reported $1.6 billion in revenue. This is an increase of 21% year-over-year.

Manufacturing output increased 1.1% in November. Durable goods’ production increased 1%. Auto-related manufacturing increased as well. Business equipment increased 1.2%.

Most builders—like Lennar (LEN), PulteGroup (PHM), D.R. Horton (DHI), and KB Home (KBH)—noted that traffic was beginning to decline. Buyers experienced sticker shock.

Homebuilders use data from the Fannie Mae survey to measure consumers’ attitudes toward future home price appreciation. This affects attitudes about risk-taking.

Construction spending rose to a seasonally adjusted annual rate of $953.5 billion in April from $951.6 billion in April. Spending is up 8.6% year-over-year.

If residential home prices begin to level off, then the builders will have to increase units to drive the top line. This will be bullish for the economy because it will put a lot of people to work.

The report on new home sales looks at new, privately owned single-family homes sold in a month. New home sales account for one-tenth of the US housing market.

Following the collapse, we saw starts average ~687,000 units per year with a low of under half a million. That’s a tremendously depressed level.

Foreclosure activity is closely watched by investors, realtors, and homebuilders alike because it forecasts future housing supply.

The ten-year bond is the basic driver of REITs and also the homebuilders Long-term interest rates are priced off the benchmark long-term bond, which is the ten-year Treasury. These days, the ten-year bond reacts to economic data through the Federal Reserve’s asset purchase program, also known as quantitative easing (or QE). As a general rule, […]

The total US dollar-denominated issuance of high-yield debt stands at $56.9 billion YTD in 2016—29% lower compared to the same period in 2015.

In December 2015, non-farm payrolls increased by 292,000, easily topping Wall Street’s estimate of 200,000.

The 20-city index reading for March, implied an average month-on-month (or MoM) price increase of 0.9% in the 20 metros tracked by the index.

Manufacturing activity is a good sign for job growth. Job growth has been the Achilles’ heel of this recovery. Although manufacturing isn’t the economic driver it used to be, it still matters.

Walmart (WMT) has a long history and strong brand name recognition. But is there reason to believe WMT stock could actually withstand an economic meltdown?

The overall drop in foreclosure activity over the past year is good news for homebuilders. Currently, gross margins are experiencing seven-year highs.

We’ve seen big increases in average selling prices out of homebuilders such as Lennar Corporation (LEN), Toll Brothers Inc. (TOL), D.R. Horton, Inc. (DHI), and Pulte Homes, Inc. (PHM).

Building permits and housing starts data are released jointly by the Census Bureau and the Department of Housing and Urban Development.

We’re seeing energy-intensive industries relocate back to the US. This will do wonders for the employment picture. It will provide good-paying middle-class jobs—which this country desperately needs.

The large foreclosure pipeline in the judicial states is one reason why prices are still weak in the northeast. Homebuyers don’t focus solely on existing supply.

Construction spending is just off its post-recession high, but it’s still depressed. Current levels equate to mid-2003 spending levels.

Lennar Corporation (LEN) is a large, relatively diversified homebuilder with a broad geographic footprint. The company focuses on the non-luxury segments.

Most people didn’t believe the declines early in the bear market, so we shouldn’t be surprised that people don’t believe we’re in a bull market for homes.

The General Business Conditions Index showed that manufacturing continued to expand in New York, but at a slower rate than the month before. 31.4% of respondents reported better conditions, while 16.7% reported worse conditions—the net result was 14.7%. This was a decrease from last month.

It’s important to for investors to understand how real estate prices affect mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and Redwood Trust (RWT) as well as homebuilders.

The NAHB Wells Fargo Housing Market Index, which measures homebuilder sentiment, peaked at 71 during the height of the housing bubble in late 2005. It bottomed out at 8 in early 2009.

In July, the Northeast saw housing starts jump from 116,000 to 134,000, while starts rose from 171,000 to 175,000 in the Midwest.

In June, the total foreclosure inventory fell 26% from a year ago to 375,000 homes. This works out to be about 1% of all homes with mortgages.

Planned job cuts rose 19% in July compared to June. However, they fell 57% YoY (year-over-year) in July.

Post Holdings (POST) issued junk bonds worth $1.75 billion on July 25. The senior notes were rated B3/B and carried a coupon of 5.0%.

D.R. Horton (DHI) reported net income of $294.8 million, or $0.66 per share, for 3Q16.

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.

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.

This week is relatively data-light. However, a slew of reports will interest real estate investors.

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.

The week after the jobs report usually doesn’t have much data—more or less, this week isn’t an exception. Earnings season kicks off this week.

Mortgage purchase applications fell 3% in the week ending June 24, 2016. We’re at the tail end of the seasonally strong period for house purchases.

Aside from employment, the most important indicator of economic well-being is wages.

In May 2016, non-farm payrolls rose by 38,000, which missed Wall Street analysts’ estimate of 160,000 by a wide margin.

US Treasury yields rose across the yield curve for the week ended May 20, 2016. This came as minutes of the FOMC April meeting raised the probability of a rate hike in June.

On Friday, May 27, we’ll get the second revision to 1Q16 GDP. Wall Street is forecasting the number to come in at 0.9%.