Crack the Door on the Housing Market

The homebuilders, after several years of delivering bottom-line losses as the industry has struggled, are now widely expected to improving their earnings. In the case of such names as PulteGroup (PHM), Ryland (RYL), and Meritage Homes (MTH), that will mean beginning to delivering positive numbers, while profit growth is expected to continue at Toll Brothers (TOL), D.R. Horton (DHI), NVR (NVR) and Lennar (LEN), among others. The expectation for better financial performance reflects a healing, if not improving, outlook on the housing starts for the single-family market, which is now expected to reach 499,000 units this year and 660,000 units in 2012, according to the National Association of Home Builders (NAHB).

As I always say, context is key -- and, after averaging at 450,000 units over the 2009-to-2011 period, the 2012 forecast looks favorable. A more sobering view is had, however, when we look back a bit further and see that single-family housing starts in 2007 were at 1.04 million units. In similar fashion to the domestic automotive industry, things are shaping up for the U.S. housing industry and the homebuilders, and all appears to be heading in the right direction. Still, we are a long way off from housing starts and earnings from a few years ago....587 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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