Sector Snap: Housing
NEW YORK -- The shares of at least four homebuilders hit new highs and construction materials companies got a boost as well Wednesday from the release of a new report showing that U.S. builders started construction on homes in September at the fastest rate since July 2008, another sign of a recovering housing market.
The Commerce Department said builders broke ground on single-family homes and apartments at a seasonally adjusted annual rate of 872,000 in September, marking a 15 percent from the August level.
Single-family construction rose 11 percent, while apartment building increased 25.1 percent. In addition, applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.
Sterne Agee analyst Todd Vencil said the September results were better than anyone expected.
"This is a significant positive for our construction materials companies, although we will be interested to see if the strength continues as we enter the seasonally weaker period for homebuilding," Vencil wrote in a note to investors.
But Citi analyst Will Randow noted that the bulk of the increase stemmed from apartment building construction, which doesn't help homebuilders and construction materials companies very much, because they mainly rely on single-family home construction to drive revenue.
PulteGroup Inc. was the second-biggest percentage gainer on the Standard & Poor's index and hit an all-time high of $17.74.
Hovnanian Enterprises Inc. posted some of the day's largest gains. Its shares jumped 35 cents, or 9.3 percent, to $4.13 in heavy midday trading, after peaking at $4.19 earlier in the day and passing its previous 52-week high of $4.03.
Meanwhile, shares of KB Home rose $1.15, or 7.5 percent, to $16.57, after peaking at $16.61 and passing their previous high of $16.33. Elsewhere in the sector, Beazer Homes USA Inc. added $1, or 5.8 percent, to $18.17. DR Horton Inc. rose $1.17, or 5.7 percent, to $21.85. Standard Pacific Corp. rose 45 cents, or 6.2 percent, to $7.77. M/I Homes Inc. rose $1.16, or 5.2 percent, to $23.30 and MDC Holdings Inc. added $1.51, or 3.9 percent, to $40.47.
Among the building materials companies, Masco Corp. rose 50 cents, or 3.4 percent, to $15.27. U.S. Concrete Inc. added 30 cents, or 4.9 percent, to $6.42. Vulcan Materials Co. rose $1.53, or 3.2 percent, to $49.31 and Martin Marietta Materials Inc. picked up $2.36, or 2.8 percent, to $86.26.