Home Builder Stocks Soar, Reaching 2-Year Highs

March 22, 2012

An increase in housing construction and sales has been helping home builder stocks grow the last six months, reaching the highest levels in two years, The New York Times reports. In fact, 11 home builder stocks have increased 80 percent since October alone, according to a Standard & Poor’s index. 

It’s been a rough road for the home building industry in recent years: Home builder stock shares lost about half of their value when the market dramatically slowed in 2007, and stocks dropped even more during 2008 and 2009.

Stock shares for home builders typically rise before spring and summer, which are viewed as the busiest seasons for home buying.

But “if you were looking for a home run kind of move, you needed to have bought when the stocks were significantly undervalued six months ago,” says Philip J. Orlando, Federated’s chief equities market strategist. “But we are starting to see fundamental improvement. So you may have a situation where instead of stocks falling, maybe they drift sideways. We are not looking for a collapse. We are just not looking for a move up.”

Source: “Home Builder Stocks at Highest Point in 2 Years After 6-Month Rise,” The New York Times (March 22, 2012)

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