Are Housing Stocks Outrunning Reality?
Home building companies including Pulte (PHM), Lennar (LEN), Toll Brothers (TOL) and Hovnanian (HOV) have left the market in the dust. This seems like the rebound so many people have been waiting five years to see. But economist Robert Shiller – he of the Case-Shiller housing index – seemed more reserved and unwilling to call a bottom in the housing market.
So it should make an investor wonder, have the stocks run up ahead of reality? Let’s look at the evidence. Housing starts have risen 3.61% year to date.
And unemployment has eased a bit.
And here’s what home builder stocks have done.
And they're not cheap. Pulte and Hovnanian still have trailing twelve month losses.
To be sure, there were a few positive signs of life, but are investors getting a bit too exuberant?