Beaten-Down Housing Stocks See Light at the Tunnel's End
Homebuilder stocks rose Thursday following a Wall Street Journal report showing hedge funds have been buying up housing-related investments.
Both Zelman & Associated and Goldman Sachs predict a housing pickup, possibly as soon as next year.
In the past three months, the PHLX Housing Sector Index is up nearly 30 percent, on pace to finish with its best quarterly percentage gain since Q2 2003 when it ended up 30.7 percent at 140.42.
Homebuilders are seeing a nice bounce today on the back of greater pending home sales, which rose 7.3 percent in November to 100.1, the highest level in 19 months.
Indeed, the increase in the number of Americans signing contracts to buy existing homes is good news for a sector unlikely to see a quick recovery due to prolonged discomfort demonstrated below by the negative performance of housing stocks in 2011.
Additionally, Building Material stocks – three of which (OC, MAS, and VMC) fall in to the PHLX Housing Sector Index – are also seeing a healthy upswing today and for the quarter. These stocks, however, remain a mixed bag for the year.