Rise in Pending Home Sales for November Much Better Than Expected
Stocks remain in the black Thursday as continued positive data on housing is giving confidence to investors -- at least over the near term. The Dow Jones is currently up 121 points, the Nasdaq is up 21, and S&P 500 is up more than 11 points.
The National Association of Realtors' index of pending home sales rose 7.3 percent for the month of November. The reading was down slightly after climbing 10.4 percent in October. The index is now at the highest level in a whopping 18 months.
Economists were expecting a rise of just 1.5 percent for the month.
Pending home sales rose 6.9 percent from November of 2010.
The markets may be finding an equilibrium. First, the pros: construction is beginning to pick up, the number of homes on the market has declined and builder confidence has improved. The cons: another wave of foreclosures will hit the market next year with a large percentage of homes still underwater, bank loan requirements are still next to impossible to meet, and unemployment rates are still higher than average.
Another factor influencing market players is housing affordability which is near record high levels. Current rates have not been seen since between 2001-2006 depending on location. "Affordability," however, doesn't mean much if funding is not there: recent reports from realtors indicate pending deals have fallen through over the past month or two as banks have backed away. The fact that these sales are "pending," then, becomes crucial as existing home sales, for example, are not calculated until a contract closes.
Either way, a pick up in demand is -- following the entrenched housing market of 2007 and forward -- certainly music to investors' ears.
Shares of the SPDR S&P Homebuilders ETF (NYSE: XHB) are 3 percent higher on the news this afternoon. Within the homebuilding group, shares of Toll Bros. (NYSE: TOL), Lennar, KB Home (NYSE: KBH), Beazer (NYSE: BZH), DR Horton (NYSE: DHI), PulteGroup (NYSE: PHM) and Hovnanian Enterprises (NYSE: HOV) are up between 3 and 6 percent.
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The National Association of Realtors' index of pending home sales rose 7.3 percent for the month of November. The reading was down slightly after climbing 10.4 percent in October. The index is now at the highest level in a whopping 18 months.
Economists were expecting a rise of just 1.5 percent for the month.
Pending home sales rose 6.9 percent from November of 2010.
The markets may be finding an equilibrium. First, the pros: construction is beginning to pick up, the number of homes on the market has declined and builder confidence has improved. The cons: another wave of foreclosures will hit the market next year with a large percentage of homes still underwater, bank loan requirements are still next to impossible to meet, and unemployment rates are still higher than average.
Another factor influencing market players is housing affordability which is near record high levels. Current rates have not been seen since between 2001-2006 depending on location. "Affordability," however, doesn't mean much if funding is not there: recent reports from realtors indicate pending deals have fallen through over the past month or two as banks have backed away. The fact that these sales are "pending," then, becomes crucial as existing home sales, for example, are not calculated until a contract closes.
Either way, a pick up in demand is -- following the entrenched housing market of 2007 and forward -- certainly music to investors' ears.
Shares of the SPDR S&P Homebuilders ETF (NYSE: XHB) are 3 percent higher on the news this afternoon. Within the homebuilding group, shares of Toll Bros. (NYSE: TOL), Lennar, KB Home (NYSE: KBH), Beazer (NYSE: BZH), DR Horton (NYSE: DHI), PulteGroup (NYSE: PHM) and Hovnanian Enterprises (NYSE: HOV) are up between 3 and 6 percent.
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