Shares of homebuilders rose after a new report said housing prices have increased for the third straight month.
The Standard & Poor’s/Case-Shiller home-price index showed Tuesday that prices rose in June from May in 19 of 20 cities tracked. Prices were 3.6 percent higher in the April-June quarter from in the previous quarter. The numbers are not adjusted for seasonal factors.
The numbers were better than many analysts expected, prompting a rosier outlook for some homebuilders. The housing market remains shaky, to be sure, and further price declines are expected this year.
Still, Jack Micenko, an analyst with Susquehanna International Group, told clients in a report Tuesday that some homebuilders might do better than he previously expected. Micenko upgraded Toll Brothers Inc. and NVR, Inc. to “Positive” from “Neutral.” He also upgraded KB Home to “Neutral” from “Negative.”
Micenko made it clear homebuilders are not out of the woods. The housing market remains stubbornly sluggish, with a glut of foreclosed properties on the market depressing demand for new homes.
Over the past 12 months, home prices have declined in all 20 cities, according to the Standard & Poor’s/Case-Shiller index. Sales have also declined. The pace of sales for previously occupied homes is trailing last year’s 4.91 million sold, the fewest since 1997. In a healthy economy, people buy roughly six million homes each year.
“To be clear, we are not becoming more bullish on housing from a macro perspective,” Micenko wrote in the note. Indeed, Micenko cut his outlook for the total number of new home sales in 2012 to 339,000, down from his previous forecast of 355,000.
By The Associated Press