(Written by Becca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Yahoo! Finance.)
Analysts were surprised to find a huge spike in the architectural billing index for August, a leading indicator for construction activity. Is it possible the housing industry has hit the bottom?
The index jumped 6.3 points from 45.1 to 51.4, the biggest change in 5 years, reports Business Insider. This is significant because more hours billed for architects signals more hours down the road for construction workers.
"Many firms are still struggling, and continue to report that clients are having difficulty getting financing for viable projects, but it's possible we've reached the bottom of the down cycle." says AIA Chief Economist, Kermit Baker.
The increase in demand for design services came as a surprise to many. Especially after the recent gloomy announcement that US homebuilder sentiment hit a three-month low and showed no sign of recovery.
One of those pessimists is Yale Professor Robert Shiller who famously predicted the housing bubble. His reaction, as reported by Business Insider, to the Fed's new "Operation Twist" tactic to jumpstart the economy with lower mortgage rates is simply to scoff. "Homeowners are relatively insensitive to mortgage rates when they are lacking confidence,” he said. “The dramatic thing that is happening now is that their job isn’t secure, if they even have one.”
Even so, do you think the demand for architecture means profitable days ahead for the housing industry?
To help decide we wanted to know what short sellers think of trends in the housing market. And more importantly, which housing stocks are expected to see a strong recovery…
For ideas, we identified a list of housing-related stocks that have seen a significant decrease in shares shorted over the last month. In other words, short sellers are reducing their bets that these stocks will continue to trade lower.
Short sellers seem to think most of the bad news is already priced into these housing stocks--do you agree?
Analyze These Ideas (Tools Will Open In A New Window)
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List sorted by market cap.
1. Standard Pacific Corp. (SPF): Operates as a diversified builder of single-family attached and detached homes in the United States. Shares shorted have decreased from 21.77M to 19.67M over the last month, a decrease which represents about 2.0% of the company's float of 105.24M shares.
2. Hovnanian Enterprises Inc. (HOV): Engages in homebuilding and financial services businesses in the United States. Shares shorted have decreased from 16.38M to 12.61M over the last month, a decrease which represents about 5.53% of the company's float of 68.23M shares.
3. The Sherwin-Williams Company (SHW): Engages in the development, manufacture, distribution, and sale of paints, coatings, and related products primarily in North and South America, the Caribbean region, Europe, and Asia. Shares shorted have decreased from 6.19M to 4.93M over the last month, a decrease which represents about 1.43% of the company's float of 87.93M shares.
4. James Hardie Industries SE (JHX): James Hardie Industries SE manufactures and sells fiber cement building products for interior and exterior building construction applications primarily in the United States, Australia, New Zealand, the Philippines, Canada, and Europe. Shares shorted have decreased from 643 to 1.30K over the last month, a decrease which represents about 14809.33% of the company's float of 432.16M shares.
5. Texas Industries Inc. (TXI): Engages in the production and supply of heavy construction materials in the United States. Shares shorted have decreased from 5.96M to 5.56M over the last month, a decrease which represents about 1.84% of the company's float of 21.76M shares.