Wednesday, March 27, 2013

4 Hard Facts About The Housing Recovery

Written by: Lou Basenese
When I boldly predicted three months ago that the U.S. real estate market hit rock bottom, many subscribers objected. Vehemently.

One in particular told me to keep my crackpot predictions to myself. And then, a la Sgt. Joe Friday in “Dragnet,” he said, “All we want are the facts, Lou.”

I thought that’s what I provided on April 9, when I shared 11 irrefutable signs of a real estate recovery.

Maybe it was my wording – “signs” instead of “facts.” So today, let me make sure there’s no misunderstanding.

The real estate recovery is under way. And here are 11 more irrefutable facts to prove it…

Real Estate Recovery Fact #1: Better-Than-Expected Homebuilder Profits

On March 27, Lennar Corp. (LEN) – the nation’s second-largest homebuilder – beat analyst expectations for earnings by 100%. New orders increased 33%. Backlog grew 39%. And total sales rose 30%.

Then, on April 23, D.R. Horton (DHI) – the nation’s largest homebuilder – beat analyst expectations for earnings by 225%. (That marks the second consecutive quarter of stronger-than-expected profits.) New orders increased 19%. Backlog grew by 17%. And total sales rose 28%.

Real Estate Recovery Fact #2: Improving Builder Sentiment

With homebuilders putting up better results, we’d expect their outlook to be rosier. And it is.

On May 15, the National Association of Home Builders/Wells Fargo Housing Market Index rose to 29 from 24 in April. That’s the strongest reading since May 2007. It’s also a dramatic improvement from the reading of 14 registered just seven months ago.

Real Estate Recovery Fact #3: More Housing Starts

Homebuilders’ good results and good feelings are translating into increased activity, too.

On May 16, the Commerce Department reported new housing starts rose 2.6% to an annual rate of 717,000 units in April. And March’s figures were revised upward from an annual rate of 654,000 to 699,000.

Real Estate Recovery Fact #4: More New Home Sales

If you’re afraid homebuilders are getting ahead of the market, don’t be. Spring and summer typically bring out the buyers. And the facts show that’s happening once again.

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