Homebuilders Up On Bullish Trade Data, Lennar Corporation Q3 Beat

Homebuilder stocks gained Wednesday after a trade group offered bullish data and an important sector player beat third-quarter earnings expectations.

Builder confidence rose for a fourth consecutive month in September to a level not seen since late 2005, according to a survey by the National Association of Home Builders and Wells Fargo.

But despite a gradual, upward trend in builder confidence, "we are still not seeing much activity from first-time home buyers,” said NAHB economist David Crowe, who added that tight consumer credit conditions and rising costs for materials, building lots and labor are holding back the market.

Yet earlier Wednesday, Lennar Corporation LEN beat Wall Street expectations by a wide margin with new orders up 23 percent from a year earlier.

Lennar Chief Executive Stuart A. Miller told investors that the market conditions are "atypical" of previous housing recoveries.

Housing's comeback "has traveled in a fairly narrow channel driven by a need for production and limited by credit availability," Miller said. The recovery has been "somewhat volatile and often difficult for many to read."

Lennar was up more than five percent in mid-day trading Wednesday. Others in the sector followed, including UCP Inc UCP which gained more than 7.4 percent, Hovnanian Enterprises, Inc. HOV, up 4.3 percent, KB Home KBH up 3.4 percent and D.R. Horton, Inc. DHI, up 2.4 percent.

The exchange-traded homebuilder fund SPDR S&P Homebuilders (ETF) XHB picked up about one percent.