April Housing Data Obliterates Expectations; Investors Buy In
April housing data is out, and it obliterated consensus estimates.
U.S. Housing Starts came in at 1.14 million versus the 1.01 million estimate -- a 20.2 percent month-over-month growth. Economists had expected single-digit growth.
Building permits also grew 10.1 percent over the month, nearly 8 percentage points higher than estimates. For context, building permit filings shrank 5.4 percent between February and March.
As expected, investors became positive on homebuilders almost immediately after this data became public. KB Home (NYSE: KBH) and Hovnanian Enterprises, Inc. (NYSE: HOV) shares are up 1.9 percent pre-market session, while Lennar Corporation (NYSE: LEN) has risen nearly 1 percent.
PulteGroup, Inc. (NYSE: PHM) stock has also responded.
The SPDR S&P Homebuilders (ETF) (NYSE: XHB) will be worth watching during the rest of the trading day.
On Wall Street, MKM Partners recently talked about its favorite homebuilder stocks. Beazer Homes USA, Inc. (NYSE: BZH), KB Home and M.D.C. Holdings, Inc. (NYSE: MDC) were listed as three of the cheapest plays from a price-to-book standpoint.
MKM holds a Buy rating on KB Home with a $20 price target; it also rates Toll Brothers Inc (NYSE: TOL) as a Buy with a $44 price target.
MKM analyst Megan McGrath said interested investors should be "patient and selective."
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