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HOV vs. ETF Alternatives
Hovnanian Enterprises Inc designs, constructs, markets and sells single-family detached homes, attached townhomes and condominiums, mid-rise and high-rise condominiums, urban infill and active adult homes in planned residential developments.
Thursday, Dec 122013, 12:05 AM
Wednesday, Dec 112013, 5:30 PM
Wednesday, Dec 112013, 2:59 PM
Wednesday, Dec 112013, 2:59 PM| 1 Comment
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
Tuesday, Nov 262013, 9:34 AM
Tuesday, Nov 262013, 9:34 AM| 2 Comments
- Homebuilders have their tails in the air following this morning's housing starts report which beat expectations and also included a big building permits print - up 6.2% from September and 13.9% from a year ago.
- Full report
- ETF: XHB +0.7%, ITB +0.7%.
- Toll Bros. (TOL +1%), Pulte (PHM +1.1%), Hovnanian (HOV +1%), D.R. Horton (DHI +1.3%), Lennar (LEN -0.7%)
Thursday, Oct 242013, 3:47 PM
Thursday, Oct 242013, 3:47 PM| Comment!
- With interest rates already sharply lower than during Q3, investors look past the slowdown in new home orders last quarter at PulteGroup (PHM +7.6%) . Also reporting today, M/I Homes (MHO +7.6%) records a similar gain after new contracts of 869 homes gained 15% from a year ago.
- Not unnoticed is the average 30-year fixed mortgage rate falling 15 bps last week to a 4-month low of 4.13%.
- Other builders: Toll Brothers (TOL +2.5%), KB Home (KBH +2.9%), Ryland RYL, Hovnanian (HOV +2.5%), Standard Pacific (SPF +2.5%).
- ETFs: ITB +3.1%, XHB +2.4%.
Monday, Oct 142013, 11:35 AM
Monday, Oct 142013, 11:35 AM| 2 Comments
- The average mortgage payment on a median-priced U.S. home as a share of income rose to 16% in August, according to the NAR. It's all about interest rates, as the rise occurred even as median prices slipped slightly this summer.
- Still - by this measure - homes are still more affordable than at any time between 1989 and 2008.
- The homebuilding sector is among the worst-performing today amid this news and word of rising incentives (lower profit margins) now necessary to move product.
- ETFs: ITB -1.9%, XHB -1.6%.
- TOL -2.1%, RYL -3.1%, HOV -1.4%, WLH -3.5%, PHM -2.9%.
Tuesday, Sep 242013, 11:40 AM
Tuesday, Sep 242013, 11:40 AM| 1 Comment
- The Dow Jones U.S. Home Construction ETF (ITB +2.6%) gains following earnings reports from Lennar (LEN +5%) and KB Home (KBH +4.5%) - both of which showed interest rate hikes taking at least some bite out of results. Also, Case-Shiller data pointed to a slight slowing in home price increases. Homebuilders have been knocked for a loop since rates started going up in May - perhaps some sell the rumor, buy the news action is warranted today.
- In other homebuilder news, RBC Capital initiates coverage on Brookfield Residential Properties (BRP +4.1%) with a Buy and $27 price target.
- Toll Brothers (TOL +3.7%), M/I Homes (MHO +3.9%), Ryland (RYL +6%), D.R. Horton (DHI +2.2%), Hovnanian (HOV +2.1%).
- Other ETFs: XHB, PKB.
Wednesday, Sep 182013, 5:52 PM
Wednesday, Sep 182013, 5:52 PM| Comment!
- Home builders enjoyed a double boost today from the Fed's decision to maintain QE and keep interest rates low plus a report of resilient construction of single-family homes in August, but the Fed’s action simply kicks the can on a reduction of the bond-buying program and a subsequent increase in rates.
- ISI Group thinks the move doesn’t bode well in the long term for home builders: "It speaks of prolonged economic weakness that ultimately may negatively affect the builders if job growth continues its puny pace."
- But investors today were enjoying the short term, hoping a halt or slight reversal in the rise in rates will help spark home sales: BZH +4.4%, CVCO +4.8%, DHI +6.9%, HOV +5.3%, KBH +8.2%, LEN +6.5%, MDC +5.2%, MHO +5%, MTH +6.8%, NVR +3.9%, PHM +5.4%, RYL +8.7%, SPF +4.4%, TOL +5.1%.
- ETFs: XHB, ITB, PKB.
Friday, Sep 132013, 3:07 PM
Friday, Sep 132013, 3:07 PM| Comment!
- The builder reported "mediocre" Q3 numbers on Monday, writes analyst Joel Locker. Gross margins looked good, but SG&A expenses didn't. Home orders rose just 4.8%, missing both Street and Locker's forecasts, and August looks even worse, declining 9.3% Y/Y.
- Without substantial revenue growth in 2015, SG&A expenses as a percentage of total revenue won't improve a whole lot. Debt is a burden as well, with interest payments expected at 6.4% of projected fiscal 2014 revenue.
- Finally, there's valuation. Homebuilders typically don't trade above book value by much thanks to the cyclical nature of the industry, yet Hovnanian (HOV +0.4%) does even as spiking mortgage rates are causing a slowdown in new-home demand.
Monday, Sep 92013, 11:48 AM
Monday, Sep 92013, 11:48 AM| Comment!
- Hovnanian Enterprises (HOV +2.2%) move higher today, despite missing consensus estimates on its FQ3 earnings report.
- Net earnings fell 76% Y/Y as improving sales and margins were overshadowed by a year-earlier period that included a combined $42.7M in tax benefits and debt-extinguishment gains.
- Looking forward, the company says it sees solid profitability, with the combination of pent-up housing demand and positive long-term demographic trends for housing driving increased demand for new homes.
- On its call, HOV says the vast majority of its tax valuation allowance could potentially be used at end of FY14, adding that it has has no near term plan for any stock offering.
Monday, Sep 92013, 9:21 AM
Monday, Sep 92013, 12:05 AM
Sunday, Sep 82013, 5:30 PM
Friday, Aug 232013, 10:12 AM
Friday, Aug 232013, 10:12 AM| 29 Comments
- July new home sales fell 13.4% to an adjusted annual rate of 394K, far below expectations of 487K. The 394K pace is still 6.8% above the pace of one year ago. Given the current pace of sales, inventory rose to 5.2 months worth of homes from 3.9 in June.
- The U.S. Home Construction ETF (ITB -3%). Weighted more heavily on building suppliers than the builders themselves, the S&P Homebuilders ETF (XHB -1.9%).
- Lennar (LEN -3.8%), Toll Brothers (TOL -4.1%), Ryland (RYL -5.1%), KB Home (KBH -4.4%), D.R. Horton (DHI -3.7%), Hovnanian (HOV -3.3%).
- Treasury prices cut sizable losses and turn green, TLT +0.3%.
- Treasury ETFs: TLH, TLT, IEF, DTYL, DLBL, ILTB, TENZ, ITE, TLO, EDV, VGIT, VGLT, TMF, TYD, LBND, UBT, UST, TMV, TYO, DSTJ, DSXJ, SBND, PST, TBT, DTYS, DLBS, TBF, TTT, TYNS, TYBS, TBX.
Thursday, Aug 152013, 11:40 AM
Thursday, Aug 152013, 11:40 AM| Comment!
- The NAHB builder sentiment index rises to nearly an 8-year high of 59 in August - the last time it was higher was 61 in November 2005. The move comes with the pace of new home sales nearing 500K annually, 38% higher than a year ago, but off from the 700K consistent with a healthy market.
- The HomeBuilders ETF (XHB -0.4%) continues its summer decline, though it has bounced significantly since the NAHB print hit the tape.
- Other ETFs: XHB, ITB, PKB.
- A few stocks: Toll Brothers (TOL +2%), M/I Homes (MHO +3%), Hovnanian (HOV +1.7%), Pulte (PHM +2.2%), Lennar (LEN +3.1%), Ryland (RYL +1.3%), Beazer (BZH +2.9%).
Monday, Jul 222013, 2:58 PMHomebuilders (ITB -1.4%) tumble across the board after existing June home sales slipped a seasonally adjusted 1.2%. Rising mortgage rates were supposed to boost short-term demand as potential buyers aimed to lock in mortgages before rates went even higher, but the June report showed no sign of it. KBH -2.6%, RYL -2.5%, MTH -2.5%, DHI -2.2%, MDC -2.2%, HOV -2%, LEN -2%, PHM -1.6%, TOL -1.4%. |Monday, Jul 222013, 2:58 PM| 3 Comments