Housing companies shares like PulteGroup, Inc. (NYSE:PHM), LGI Homes Inc (NASDAQ:LGIH), Toll Brothers Inc (NYSE:TOL) and UCP Inc (NYSE:UCP) are trading down after modest home sales drop in February. Similarly, SPDR S&P Homebuilders (ETF) (NYSEARCA:XHB) is also losing after the housing data.
Though existing homes fell 3.7 percent in February, Wells Fargo & Co. (NYSE:WFC) senior economist, Mark Vitner, thinks that the year started off on a strong note. The economist is not surprised by the drop in home sales after a surprisingly strong 3.3 percent growth in January. The brokerage pointed out that the February data is modestly below the consensus and his own call.
Sales have averaged a 5.56 million unit pace in the last three-month period, which remain above the year-ago levels nationally apart from all four regional levels. Vitner pointed out that he expected sales to come below consensus mainly due to recent drop in pending home sales that are contracts for buying of an existing home.
In its research note to clients, the brokerage commented, “February’s dip in home sales allowed inventories to rebound somewhat. For-sale inventories rose 4.2 percent to 1.75 million homes. But even with the gain, the number of homes available for sale remains 6.4 percent lower than it was one year ago, continuing a string of year-to-year drops that stretches back 21 months. Relative to sales, there is now a 3.8-month supply of homes available for sale. A balanced market would have around a 5.5-month supply.”
Following the housing data release, shares of housing sector companies are trading down.
- SPDR S&P Homebuilders (ETF) (NYSEARCA:XHB) is shedding 0.52 percent.
- PulteGroup, Inc. (NYSE:PHM) is losing 0.73 percent.
- LGI Homes Inc (NASDAQ:LGIH) is falling 1.08 percent.
- Toll Brothers Inc (NYSE:TOL) is dropping 1.47 percent.
- UCP Inc (NYSE:UCP) is falling sharply by 3.5 percent.
- KB Home (NYSE:KBH) is losing 1.07 percent.
- Lennar Corporation (NYSE:LEN) is shedding 1.33 percent.
- R. Horton, Inc. (NYSE:DHI) is falling 0.84 percent.
- D.C. Holdings, Inc. (NYSE:MDC) is dropping 1.25 percent.