Home Builders Report Big Gains in Sales Orders

Some of the country’s largest home builders are reporting increased sales and a rise in new orders, The Wall Street Journal reports. Builder stocks are also reflecting the increased optimism in the sector, rising 31 percent so far this year, according to the Dow Jones U.S. Home Construction index. "Builders say April's sales remain brisk, leaving the the companies optimistic that they will report even stronger quarterly results later this year and giving them enough confidence to raise prices in some markets, including those hit hard by the housing crash," The Wall Street Journal reports. Housing analysts say a big factor helping builders' recovery is the dropping inventory of existing homes. Also, many investors are buying up bargain-priced existing-homes in all-cash deals, which has made other home buyers start considering new home construction more. Several home builders have reported gains in sales orders recently, including Ryland Group, which cited a 46 percent increase in orders; Meritage Homes Corp. reports a 36 percent rise in new orders; D.R. Horton Inc. reports a 19 percent increase; and PulteGroup Inc. reports a 15 percent increase. "As buyers realize the market is tightening, we are seeing a greater sense of urgency than we have for quite some time," Steven J. Hilton, the chief executive of Meritage Homes Corp., said in a recent conference call. "The market has clearly turned in a more positive direction, and we are switching over to offense rather than defense.” Source: “Home Builders’ Health Improves,” The Wall Street Journal (April 26, 2012)