The National Association of Realtors released data for July that showed sales of existing homes climbed 2.3 percent to a 4.47 million annual rate. This marginally missed a Bloomberg analyst forecast of a 4.51 million rate, though raised the likelihood of a further recovery in housing in the latter half of the year.
It appears that ultra-low mortgage levels, cheaper real estate, and improving numbers for employment and consumer points are turning the fortunes of the housing industry.
In a sign that home prices may have bottomed out, the median price of an existing home rose 9.4 percent from last year – this was the biggest 12-month gain since January 2006. Supply of existing homes remained flat at around 6.4 months of sales. Distressed home sales were down 29 percent from July 2011.
Last week it was reported that building permits rose to a four-year high in July. Builder confidence also rose in August to the highest level seen since 2007.
The better conditions are being reflected in the results of home-builders.
Luxury home builder Toll Brothers Inc (NYSE:TOL) reported a 46 percent rise in net income for its third quarter. Toll Brothers Inc (NYSE:TOL) earned $61.6 million (36 cents a share), compared to $42.1 million (25 cents a share) a year ago, a substantial beat over analysts’ estimates of 18 cents a share. “We are enjoying the most sustained demand we’ve experienced in over five years,” chief executive Douglas Yearley said. Home deliveries rose 39 percent, while average price rose from $569,000 to $576,000.
Credit Suisse researched noted the following about Toll Brothers (NYSE:TOL)
Toll noted that the pent-up demand continues to aid new order trends, and stressed the historical pattern of price appreciation as the recovery takes hold, as a result of the limited inventory of finished lots for new construction. The company also mentioned improving buyer confidence, which we think will also show in added option/upgrade purchases for the homes, enhancing margins.
PULTE GROUP INC. DL -,01 (FRA:PU7) also delivered a beat on its profit for the second quarter while orders jumped 32 percent.
AV Homes Inc (NASDAQ:AVHI), a developer in Florida and Arizona, reported a 41 percent rise in home deals closed in its second quarter, while contracts signed doubled. Allen Anderson, chief executive officer of AV Homes Inc (NASDAQ:AVHI), said: “The housing market continues to gain momentum. We are no longer battling the headwinds of the housing recession.”