Home Builder Activity A Warning Sign?
Nicholas Santiago | May 29, 2013 12:21AM ET
Today, the leading home-builder stocks have rolled over a bit after the Case-Shiller survey. The Case-Shiller survey reported a 10.9 percent increase in home prices in March, this was the highest increase since April 2006. Initially, the leading housing stocks popped on the news, but since that time these leading housing stocks have reversed and traded lower throughout the afternoon.
Two of the most important home-builder stocks that any trader can follow are Lennar Corp. (LEN), and Toll Brothers Inc (TOL). Both of these stocks have faded sharply from the opening bell. LEN stock is trading lower by 0.65 cents to $42.14 a share. Day traders should watch for intra-day support around the $41.40 level. Some other leading home-builder stocks that have faded from the morning highs include DR Horton Inc. (DHI), and PulteGroup Inc (PHM).
The home-builder stocks have led the major stock indexes higher since October 4, 2011. This leading industry group has benefited from record low yields. Today, yields on the 10-year note are higher by 0.124 to $2.135 percent. Higher yields on the 10-year U.S. Treasury Note could stall out the housing boom. Private equity firms have also been buyers of single family homes which has helped to take excess inventory out of the market. The Federal Reserve has also been buying about $45 billion a month worth of mortgage backed securities. All of these stimulating factors have helped to rally the housing stocks over the past year. Any sharp rollover in the housing sector could be a warning sign that this current stock rally could be coming to an end.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.