Homebuilders Rally on TALF News, Lennar Upgrade, DR Horton Earnings (LEN, DHI, TOL, more..)

Homebuilder stocks are seeing significant upside once again today following the Fed's creation of a new rescue facility, the TALF, or Term Asset-Backed Securities Loan Facility. The TALF is aimed at helping market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration.

Homebuilders are surging today as, under the TALF, the Fed will lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans.

Based on the SPDR S&P Homebuilders ETF (NYSE: XHB), or the XHB, the homebuilder sector is about 8.1% higher today. The move follows a 12% rise in the index yesterday. While yesterday's rise may prove to be greater than today's, the action today may have more substance behind it as it appears these stocks are trading off of industry-related news rather than just a broader market rally.

In addition, homebuilding stocks may be feeling upward pressure today on the back of a UBS upgrade of top homebuilder Lennar (NYSE: LEN). The firm raised its rating on Lennar from Neutral to Buy with an $8 price target. Even with shares of Lennar up about 90% so far this week, UBS's price target represents further upside of about 15% from current levels.

Finally, homebuilding investors may also be feeling more confident following slightly better-than-expected Q4 earnings from D.R. Horton (NYSE: DHI), another large builder in the space. While the company reported a large loss on $1.15 billion in impairment charges, its net loss came in just below the low-end of its previously issued guidance.

Here is a list of some homebuilders and their price performance today:

• Lennar up 50.7% to $6.90
  
• D.R. Horton up 29.8% to $6.49
  
• Toll Brothers (NYSE: TOL) up 7.1% to $18.34
  
• Pulte Homes (NYSE: PHM) up 10.6% to $9.70
  
• Centex (NYSE: CTX) up 13.6% to $7.95
  
• KB Home (NYSE: KBH) up 8.5% to $10.47
  
• Ryland (NYSE: RYL) up 14% to $15.18
  
• Meritage Homes (NYSE: MTH) up 19.3% to $10.31
  
• Beazer Homes (NYSE: BZH) up 11.6% to $1.64

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