Homebuilder shares surged Tuesday as the foreclosure report signaled that they face less competition. D.R. Horton (DHI) rose nearly 8%, KB Home (KBH) about 7%, Lennar (LEN) and Toll Bros. (TOL) 6%, with PulteGroup (PHM) up 5.5%.
7/24/2013
New-home sales
Finally, shares of the nation's largest homebuilders are all tanking today despite an upbeat reading from the Department of Commerce on new-home sales last month. According to the government, sales in June equated to a seasonally adjusted annual rate of 497,000. That's 35% higher than in the same month last year and 8.3% up from May.
The reason homebuilders like D.R. Horton (NYSE: DHI) and Toll Brothers (NYSE: TOL
) are taking it on the chin, in turn, has to do with the trend in prices. To wit, the median price of a new home fell in June by nearly 5% from $262,800 in May to $249,700. And just like Apple's experience with falling iPhone sales, if this trend continues it will put pressure on these companies' margins, and thus their bottom lines.