Housing a Bright Spot for Struggling U.S. Economy (XHB) (LEN) (TOL)

July 18, 2012 8:39 AM EDT
Record-low mortgage rates and cheaper properties are finally starting to attract buyers. June Housing Starts come in at 760K, versus the consensus of 745K. June Building Permits come in at 755K, versus the consensus of 765K

"The long-awaited housing market recovery is definitely under way as demand is improving," said Stuart Hoffman, chief economist at PNC Financial Services Group.

Housing starts and building permits aren't the only positive sign for housing. Data yesterday show that U.S. homebuilder confidence in July climbed to the highest level since September 2002. Considering that homebuilder stocks prices have climbed by close to 25 percent, with some homebuilders stocks doubling in price, this confidence is clearly shared by investors.

Taken on the whole, it is increasingly clear to investors that housing in the U.S. has bottomed, but they haven’t exactly made a major turn. The S&P/Case-Shiller index of home prices showed an only modest increase of 0.7 percent in April. Considering the high unemployment rate in the U.S., many analysts say it could be some time before we see a significant pop in the value of home prices.

SPDR S&P Homebuilders (NYSE: XHB) is up over 23 percent year-to-date.
Lennar Corp. (NYSE: LEN) is higher by 56.61 percent year-to-date. Toll Brothers Inc. (NYSE: TOL) is higher by 42 percent over the same period.

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