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Home Building Comeback Favors One Region of the US

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The housing sector continues to show signs of improvement, especially from the Western United States. The latest numbers show not only are consumers feeling more optimistic—but an increase in builder initial public offerings shows home builders are also feeling bullish.

Three new home builders have come to market since January, bringing the amount of public companies in the sector to 17 from 14. The IPOs raised $1.2 billion combined.

TRI Pointe Homes (TPH), Taylor Morrison Home (TMHC) and William Lyon Homes (WLH) all have a business focus in the West, rivaling better-known names such as Pulte Homes (PHM), KB Home (KBH) and DR Horton (DHI).

Jason Lail, manager of the real estate research team at SNL Financial, said home sales and construction starts are up in the western region. Phoenix, San Francisco, Las Vegas and Los Angeles had the largest increases in home prices.

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Builder confidence in the market for newly built, single-family homes rose on the National Association of Home Builders/Wells Fargo Housing Market Index for May. NAHB Chairman Rick Judson said, “Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies.”

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Home builders continue to outperform the broader market. The SNL Homebuilders Index rose 81 percent in the past 52 weeks versus the S&P 500, which rose 30 percent.

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