Although the housing market is still in the doldrums, you
wouldn't know it looking at the performance of home building
The SPDR S&P Homebuilders (NYSEArca: XHB) are ahead by 2.65%
this year after recording gains of 17.40% and 27.60% in 2010 and
tied to the homebuilding sector like the iShares Dow Jones U.S.
Home Construction Index Fund (NYSEArca: ITB) have followed suit. Is
this a sign of a bull market in the homebuilding sector? Is the
A gander at the activity in residential real estate paints a
more realistic picture of what's really occurring.
New home sales during the month of February fell to levels not
seen in 50-years. According to the National Association of
Realtors, first time home buyers accounted for just 31% of new home
purchases over the past two months. Put another way, finding new
home buyers with such a weak job market and fragile economy has
been tough going.
A home buyer tax credit and the U.S. Treasury's purchase of $142
billion in federal agency mortgage-backed securities were tried to
revive the housing market, but with limited success. The home buyer
tax credit expired last year and the Treasury will start selling
its mortgage-backedsecurities. Now everyone will get to see how the
housing market acts without government programs designed to keep it
Lennar Corp. (
) and KB Home (
) are expected to report earnings this week and it won't be pretty.
Both companies are likely to report a drop from last year in both
earnings and revenue for the reporting quarter.