Sector Snap: homebuilders climb

Homebuilders rise on possibility that interest rates may stay low for a while longer

Associated Press

NEW YORK (AP) -- Shares of homebuilders traded mostly higher Thursday afternoon on the possibility that interest rates may stay low for a while longer.

The housing market has benefited from low interest rates because they help make mortgages cheaper, which entices consumers to buy.

In government bond trading, the yield on the 10-year note fell to 2.59 percent on Thursday from 2.63 percent Wednesday. The yield has fallen this week. It surged as high as 2.74 percent Friday after the government reported strong hiring in June. Many traders took the report as a signal that the Fed would be more likely to slow its bond purchases sooner rather than later.

But Federal Reserve Chairman Ben Bernanke said the central bank will continue to support the economy for the foreseeable future. Bernanke said high unemployment means the U.S. economy still needs help. His comments were made in a speech late Wednesday after the U.S. markets closed.

It was Fed's latest effort to reassure investors that it won't end its stimulus before it is sure the economy is strong enough. The Fed is currently buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring.

Here's how some homebuilders are faring in afternoon trading:

PulteGroup Inc. gained $1.19, or 6.8 percent, to $20.32.

Toll Brothers Inc. climbed $1.95, or 6 percent, to $34.46.

KB Home rose $1.06, or 5.8 percent, to $19.39.

Lennar Corp. added $2.60, or 7.5 percent, to $37.16.

D.R. Horton Inc. climbed $1.52, or 7.2 percent, to $22.57.

Hovnanian Enterprises Inc. gained 27 cents, or 4.9 percent, to $5.73.

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