More New Home Builds Boost Pulte, Beazer, D. R. Horton

Home builders are getting busier as more new houses were being built in January, in news that may benefit developers like Beazer Homes

, D. R. Horton

, and Pulte

. In total, new home builds rose by 1.5 percent to an annual build rate of 699,000 houses, stronger than December's figures of 689,000. A mix of lower unemployment, cheap properties, and low borrowing costs have resulted in an increase in home orders for Beazer and D. R. Horton, causing both stocks to rise slightly in pre-market trading. Analysts had been hoping for a 2.7 increase in new home starts, according to a Bloomberg survey of 79 economists. Analysts had estimated an annual rate of between 640,000 and 736,000 new home starts for January thanks to a mix of stabilization in the housing market and warmer weather. While record-low Confidence in the housing sector recently strengthened, as builders were

than before the subprime crisis. Earlier this month,

pointed to strength in the American economy. Private construction was up 2.1 percent in December, driven by demand for new commercial spaces. Residential construction was less strong, with a 0.8 percent increase on November's figures. While mortgage rates hit another

, the number of new home sales has been disappointing. Last week, Fed chairman Ben Bernanke said that the Fed has "helped lower mortgage rates to the lowest point in many, many decades, yet we are not seeing as much activity as we would like to see." Homebuilders have been challenged by slumping demand for years and have been hit harder than almost any other sector since 2007. Signs of health have shown up recently, but they are dim at best. While Beazer Homes is still losing money, its losses fell in the last quarter of 2011 to 58 cents a share, down 27.5 percent from the previous quarter. Still, the company disappointed with greater-than-expected losses for FY 2011 of $2.77 per share. Other builders have turned around, but growth is slow. D. R. Horton returned to profitability in 2011 with earnings of 10 cents per share in four consecutive quarters. At the end of 2011, the company was able to adjust for falling revenues (down 17.5 percent) by lowering costs. Similarly, Pulte Homes saw its losses turn to gains at the end of 2011, with Q4 earnings of 4 cents per share up from a surprising loss of 34 cents per share in the previous quarter. Pointing to growing demand and a gross margin expansion strategy, analysts are expecting greater profitability in 2012. The rise in new home starts for January points to momentum in the industry and is another positive trend for home builders. The drop in foreclosure inventory, which fell by over

, is another sign that the need for new builds may be rising. However, the rise in new home builds must be balanced against

, although those figures have recently been driven by refinances more than new mortgage applications.