Interesting that PHM peaked at 21.62 midday on 2/26 the same day as the sale and my post. The stock has fallen to 20.96 since.........
Pending home sales climbed a modest 0.1% month-over-month, and were down 9.1% year-over-year in January.
This missed expectations for a 1.8% MoM rise, but was better than expectations for a 10.8% YoY fall.
December's data was revised up to show a 5.8% decline, compared to an initial reading of an 8.7% fall.
"Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping," Lawrence Yun, NAR chief economist said in a press release. "Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn’t as favorable as it was a year ago."
Here's a look at the regional breakdown:
•In the Northeast the pending home sales index (PHSI) was up 2.3% on the month, but was down 5.3% from a year ago.
•In the Midwest, the index is down 2.5% on the month and 9.3% on the year.
•In the South, the index is up 3.5% on the month and down 5.5% on the year.
•In the West, the index is down 4.8% on the month and down 17.5% on the year.
While other housing data has been distorted by the severe winter, new home sales surprised in January.
The index is considered to be a leading indicator for future existing home sales. The Commerce Department expects that 80% of signings will become existing home sales transactions within two months.
Mortgage applications to buy a home fell last week to the lowest level in nearly two decades, according to a weekly survey from the Mortgage Bankers Association.
The report is a clear sign of weakness in buyer demand heading into the usually busy spring housing season.
"Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said Mike Fratantoni, the association's chief economist.
Total application volume fell 8.5 percent on a seasonally adjusted basis from a week earlier, while the Refinance Index was down 11 percent from the previous week.
The seasonally adjusted Purchase Index decreased 4 percent from one week earlier, to the lowest level since 1995.
While higher rates have pushed refinances way down from their boom levels, causing banks to fire employees, applications to buy a home were expected to rise. They are now down over 15 percent from a year ago, however.
Unusually bad weather has been blamed for weak home sales and buyer traffic in much of the nation this winter, but sales in January fell the most in the West, where weather was not a factor.
Credit availability and tighter underwriting have been far higher barriers to entry this year than rate, especially for first-time home buyers, who have played little to no role in the housing recovery.
"We're in a critical juncture in housing, and it started when rates went up a small 1 percentage point back in June," housing analyst Mark Hanson told CNBC on Tuesday. "We're going from an investor-led housing market to an end user-led housing market, and that's creating a lot of problems."
Investors drove home prices on the low end higher and faster than most had predicted. As they retreat from the market, regular buyers-who largely rely on credit-are facing shrinking affordability on top of extremely low inventory.
Like I have said many times before, I am not short this stock. I like real estate but not the home builder sector. I have a long term position in the real estate recovery with BX.
Only one analyst asked questions (most likely the only one on the line) ........ The key question was how much of the $40 million in annual savings will be realized in 2014. The reply was " we didn't bring that information with us today". I guess that really indicates to me the caliber of the management team.
Major indexes make good move up today and home builders down or flat........
The sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally large pool of potential homebuyers.
While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?
"There's going to be a reality check in the spring in terms of realizing that what we saw in 2013 is not a real market," said Daren Blomquist of RealtyTrac, a real estate sales and data website. "It's a nice bounce-back market, but ultimately you need the biggest pool of potential homebuyers out there to be able to afford those homes."
In an analysis of housing affordability, RealtyTrac found that the estimated monthly house payment for a median-priced, three-bedroom home purchased at the end of 2013 was a whopping 21 percent higher than it was at the end of 2012 in more than 300 U.S. counties. That includes mortgage, insurance, taxes, maintenance and the subtracted income tax benefit.
Some metro regions, especially in California and parts of Michigan, saw monthly house payments rise about 50 percent from a year ago.
Home prices were boosted by cash buyers in 2013, and as the cash buyers move out of the market in 2014, the buyers left are not going to be able to afford the home prices as readily in some of these markets.
Mike take it easy before you blow a gasket............ You should be more concerned with this quote from the Q4 earnings trans script.
"The ultimate shape of the housing demand curve going forward will be impacted by broader economic conditions. More jobs and ideally better-paying jobs will be critical in driving housing demand to peak levels. Home buyer demand would also benefit from better mortgage availability, particularly for first-time buyers who have been underrepresented in the recovery so far. With major changes rolling through the system, including the recent implementation of QM rules and new leadership at the Fed and FHFA, it is difficult to assess how mortgage availability will develop in the next few quarters."
I would argue that bad weather might cause someone to briefly defer their home search but it would not altogether derail it. In fact, it was reported in January that home sales in the San Francisco area plunged to a six-year low. If you look at the research report linked above, the greater Bay Area in California had warmer weather than average during January. Clearly it wasn't cold weather that precipitated that drop in sales. Instead, the demand for homes is in decline and the research presented dispels the cold weather narrative that has been broadly dispatched by the media to explain the weak housing data over the past two months. Yesterday's builder sentiment data is thus further evidence in support of my thesis that the housing market is in trouble.
Measure of US homebuilders' confidence falls as winter weather dims sales outlook. U.S. homebuilders' confidence in the housing market declined sharply this month as the severe weather battering much of the nation keeps many would-be buyers at home.
Storms and cold weather dampened builders' outlook for sales ahead of the spring home-selling season and could further slow the pace of home construction.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slid to 46. That's down from January's reading of 56 and is the lowest level since May.
Readings below 50 indicate that more builders view sales conditions as poor rather than good.
Builders' view of current sales conditions for single-family homes, their outlook for sales over the next six months and traffic by prospective buyers have all declined since January.
The overall index had been above 50 since June, reflecting a strengthening housing market. The latest reading complicates the outlook for sales just as the annual spring buying season ramps up. Typically, the spring season sets the pattern for residential hiring and construction in the ensuing months.
Sales of new homes jumped 16.4 percent last year to 428,000, the highest level in five years. Sales typically slow in November and December. But this winter's onslaught of snowfall and freezing temperatures has exacerbated the seasonal slowdown. Economists predict that sales of new homes fell for the third month in a row in January.
The builder survey adds to reports showing that severe weather this winter has taken a toll on the economy. Auto sales fell 2.1 percent in January and posted their first year-over-year drop in sales since August 2010. Retail sales also tumbled last month after a smaller decline in December.
"The weather also hurt retail and auto sales, and this had a contributing effect on demand for new homes," said David Crowe, the NAHB's chief economist.
Sales to first-time home buyers remain depressed, a new Washington Post article notes, directing some blame at student loans. Many young people are graduating with higher debts than earlier generations while stricter lending standards have made it harder to get a mortgage.
Chief economist Lindsey Piegza of Sterne Agee has drawn a similar conclusion. About seven in 10 graduates leave school with debt and almost 40 million have sizable loans to pay off, she wrote in a recent report.
Total U.S. student-loan debt now sits at $1.1 trillion, making it the largest kind of consumer debt after mortgages, according to figures issued Tuesday by the New York Federal Reserve. Total student debt climbed $114 billion in 2013 and it has doubled in the past eight years.
What’s more, The New York Fed found that 11.5% of student loans are 90 days past due or in default.
“A massive debt burden topping one trillion dollars possess crippling risks for the individual graduate but also, unaddressed, carries large consequences for the economy as well,” Piegza said.
The consequences not only include weaker home sales, but less spending on all kinds of consumer goods and services. Slack demand, in turn, gives businesses less reason to hire and create more jobs. And if graduates are unable to find a well-paying job, the burden of paying back the debt grows even more onerous.
Unlike other forms of debt, student loans are almost impossible to reduce or eliminate through bankruptcy unless an individual can prove extreme hardship. Many people take years, sometimes even decades, to pay all the debt off. It can even hurt their ability to save for retirement.
Shoveling snow to help out home builders get ready for a late spring.........
This stock was at $20 last January and here we are at $20 with forward revenue growth of only 1.5%.
Guess what it's snowing here again............
Retail sales in the US took a hit in January, thanks in large part to the terrible weather. And, that may not be a good thing for stocks down the road.
The Department of Commerce says January retail sales were down 0.4% compared to December, though up 2.6% over January 2013. Take out autos and related parts and the retail sales were just flat compared to December, though up 3% compared to last year.
"We don’t want to scare anyone," wrote Chris Rupkey, Chief Financial Economist at Bank of Tokyo-Mitsubishi, in a Thursday morning note, "but one rule of thumb for a recession, when the economy is thrown completely back into reverse, is three consecutive months of declining retail sales. We have two months now. "
As if that's not scary enough, consider that the market benchmark S&P 500 index has a lot of retail stocks that may not have good news to report when first-quarter earnings are released in a couple of months. In case you were wondering, consumer goods make up the largest sector of the index, comprising 37.5% of the index's entire market cap.
CNBC contributor Gina Sanchez, founder of Chantico Global, says it's not just poor sales in the weather-sensitive auto industry that has the markets guarded. "We're looking at some weakness in retail that can't be explained by the weather," says Sanchez. "That's really what people are watching."
For that reason, Sanchez warns investors to stay away from buying retail stocks for their portfolios.
But it's not just the technicals that make Busch wary of retail stocks. At the end of 2013, 1.3 million unemployed Americans saw their unemployment benefits expire. "The ending of the jobless benefits [is] hurting retail spending as well," says Busch.
WASHINGTON (Reuters) - U.S. manufacturing output unexpectedly fell in January, recording its biggest drop in more than 4-1/2 years, as cold weather disrupted production in the latest indication the economy got off to a weak start this year.
Factory production fell 0.8 percent last month, the Federal Reserve said on Friday. It was the first drop since July and the biggest since May 2009, when the economy was still locked in recession. Output had increased 0.3 percent in December.
The Fed attributed the first decline in factory output since July to "severe weather that curtailed production in some parts of the country."
Manufacturing joined weak retail sales and employment data in suggesting that cold weather had spurred a step-back in economic growth early in the first quarter.
"The big question is whether the U.S. economy is slowing significantly or whether it is merely going through a soft patch caused by extreme weather. The evidence points to the latter," said Chris Williamson, chief economist at Markit in London.
The weakness in factory output last month was broad-based, with the production of motor vehicles and parts tumbling 5.0 percent after ticking up 0.1 percent in December.
"The inclement weather in January contributed to some of these decreases. Numerous motor vehicle assembly facilities lost one or more days of production during the month," the Fed said in a statement.
It also revised down fourth-quarter output at the nation's factories to a 4.6 percent annual rate from the 6.2 percent pace it had reported in January.
The drop in factory output last month and a 0.9 percent fall in mining production weighed on overall production, which fell 0.3 percent, the biggest drop since April.
No short here...... Just giving the facts as I see it. Revenue growth estimate for 2014 has slowed to 1.5% and forward PE for 2015 is (13). Stock is already fully valued for 2015 according to past history.
Take a look at past earnings and notice the stock price high during the big growth years from 2004 - 2007.
Interesting observation in my midwest neighborhood during my 3-mile walk over the weekend........ No houses for sale which is very unusual the past 5 years. Could it be the weather maybe?... could it be the 8% property tax increase I just paid or the 40% increase in home insurance the past 3 years maybe?... could it be sticker shock on Obamacare maybe?... or is this the year of wait and see?????