NEW YORK, NY--(Marketwire -07/27/12)- Homebuilder stocks have been on an impressive rally as the U.S. housing market has been on a slow but steady recovery in 2012. The Standard and Poor's Supercomposite Homebuilding Index (S15HOME) is up over 40 percent year-to-date. Homebuilders took a hit Wednesday after government data showed new home sales unexpectedly declined in June. Five Star Equities examines the outlook for companies in the Residential Construction Industry and provides equity research on KB Home (KBH) and Toll Brothers Inc. (TOL).
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After reaching a two-year high in May new home sales fell sharply in June. The Commerce Department on Wednesday reported that new home sales fell 8.4 percent to a seasonally adjusted rate of 350,000. While the steep drop was unexpected, sales in June are still 15 percent higher than a year ago. Other indicators throughout the year have signaled a U.S. housing market recovery and as a result builders have been more confident in breaking ground on new homes.
"While a housing recovery is under way, it is most certainly not 'all good,'" Dan Greenhaus, BTIG's chief global strategist, said in a note to clients. "Fits and starts are to be expected, and clearly this summer is one of the 'fits.'"
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KB Home is one of the largest and most recognized homebuilding companies in the United States. Since its founding in 1957, the company has built more than half a million quality homes. The board of directors of KB Home recently declared a quarterly cash dividend of $.025 per share on the company's common stock. Shares of the company are up over 38 percent year-to-date.
Toll Brothers is the nation's leading builder of luxury homes. The Company began business in 1967 and became a public company in 1986. The company recently announced a partnership with Shea Baker Ranch, LLC to develop over 2,000 new homes in Lake Forest, CA, one of south Orange County's most desirable markets. Shares of Toll Brothers are up over 40 percent this year.
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