Shares of homebuilders declined on Tuesday following new reports highlighting the decline of U.S. home prices in 19 of 20 major cities on the carefully analyzed housing index.
Analysts anticipate continued price drops as summer approaches. The falling prices continue to reflect negatively on the economy and slow the recovery for the sector as a whole. The housing market has been extremely hard hit by the recession and has continued to decline as many other sectors have effectively rebounded in the past two years. The housing industry for its part is experiencing the worst two years for home construction in over half a century. December to January, the month tracked by the S&P’s Shiller Index and identified in today’s report marks the six consecutive month home prices have declined.
A better part of the cities tracked by the index have current home price levels mirroring 2003, at very beginning of the housing boom. Four cities listed on the index, Atlanta, Las Vegas, Detroit and Cleveland, are seeing home values at their lowest point in 11 years.
The report compounded the damage of last week’s Commerce Department announcement sales of new-home sales sunk sharply in February. On a more positive note, further analysis of the report shows moderate improvements by way of seasonal adjustments that show only 12 of the 20 cities in the index experiencing month-over-month declines as compared with 19 of the same 20 cities 3 months prior.
Still this was not enough of an impetus for shareholders today. Government incentives for the housing market, like tax breaks, now come to pass it’s unlikely a new impetus will arrive to buy in the near future, pushing down the sector.
Today, shares of Lennar Corp. dell hardest among shares of homebuilders, plunging 68 cents, or 3.4 percent, to $19.07. The decline comes as a consequence of a mixed first-quarter report boasting profits alongside news that fewer homes were delivered and ordered.
Other major homebuilders that had a rough day today include:
- MDC Holdings Inc. which slid 53 cents or slightly beneath 2 percent, to $25.84.
- Ryland Group Inc. declined 30 cents or almost 2 percent, to $16.41.
- KB Home dropped 25 cents or 2 percent, to $12.94.
- D.R. Horton Inc, which slipped 20 cents or just under 2 percent, to $11.95.
- Standard Pacific Corp. sunk 9 cents, or 2.4 percent, to $3.74.
- Toll Brothers Inc. was down 4 cents to $20.44 at close.
One company that finished the day on top includes, Meritage Homes Corp., which rose 8 cents to $24.27. Meanwhile, the broader Standard & Poor's 500 index finished up 0.7 percent on the day.
Home Depot., the massive home renovation store, unlike the housing market, ironically was one of the major gainers today. It makes sense that if people can’t SELL their houses or buy a new one they may just have to settle for fixing them up. Today’s gain for the company was on contingent the news that the company will buy $1 billion in its own stock and not that people have found out about the state of the housing market and decided to buy new curtain rods and
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