Record low interest rates, held down by a massive money print from Ben Bernanke and the Fed, has let to dramatically improved demand in the housing sector. After struggling for several years with many building even declaring bankruptcy, the rebound looks here to stay. Toll Brothers recently reported Q2 results topped street expectations nearly across the board and robust results implies further upside from other builders. Looking at the details, deliveries of 895 units with a strong backlog of over 3600 units indicates more growth is coming. Earnings per share for Q2 of 0.14 topped street expectations of just $0.07. Others that could see further strength in coming weeks include Hovanian (NYSE:HOV), Meritage(NYSE:MTH), and Ryland(NYSE:RYL).
Despite share gains over the last year in excess of 50%, many believe the housing rebound remains in the early stages and those leveraged to its return to prominence could see dramatic upside later in 2013. Also on the bullish side for homebuilders and the sector RealtyTrac reported that in April foreclosures declined by an impression 23%. As inventory finally moves, this could spark demand for new home sales. Also consistent with improved inventory trends April existing home sales were reported to have rebounded to the best levels seen since 2008. One concern would be if Bernanke were to depart this position as chief money printer, the next chairman could be more fiscally and monetarily responsible. Heading into the next few fed meetings the market and investors will certainly pay close attention to how much further QE infinity can continue as well as a possible unwind strategy. Until then, the risk on trade, with homebuilders leading the charge is poised to continue to gain momentum