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.
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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.”