Current price to book multiples (north of 1.5) are at a premium to their 10-year averages. That's telling you the stocks are richly priced. Deliver, or sell off.
Housing starts have been stuck around 700,000 seasonally adjusted annual rate for 4 months; we are expecting the same for March. This is about half the 10-year average of roughly 1.5 million homes. We need this to move up more. Much more. But it's not moving, and no one is expecting huge moves.
The other problem: much of the gains have been driven by multifamily. That still counts, but you get a bigger effect economically from single family.
One important point: move up builders like Toll and Standard Pacific have been doing better than first-time builders because of the perception that move-up buyers will have an easier time getting mortgages.
Here are the average selling prices for the big builders:
(average selling price, thousands)
Standard Pacific $374
KB Home $219
DR Horton $214
Standard Pacificoutperforms on IPO hopes. Curiously, SPF, a move-up builder with heavy business in California, has been outperforming other builders recently.
Here's what Susquehanna had to say: "SPF is primarily a West Coast builder with an average selling price in CA of ~$519k.. Investors may be favoring the name in anticipation that the recent pop in West Coast tech IPO's, such as Facebook (FB), ZNGA, Z, LNKD, JIVE etc.., will spur home buying / spending, particularly from the move-up / luxury buyer. The move-up / luxury buyer equates to 73% of SPF's deliveries..."
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