Lennar (LEN) Hits 52-Week High on Solid July Home Sales
Lennar Corporation LEN crafts a new 52-week high of $79.64 on Aug 21, 2020. The stock pulled back to end the trading session at $79.36, gaining 3.2%. In addition to Lennar, other homebuilding stocks like D.R. Horton, Inc. DHI, NVR, Inc. NVR and PulteGroup, Inc. PHM attained their respective 52-week high level on Aug 21. The surge was attributable to record month-over-month existing home sales growth for July, as released by the National Association of Realtors or NAR on Aug 21.
In fact, Lennar has gained 42.3% year to date against the Zacks Building Products - Home Builders industry and Zacks Construction sector’s 30.9% and 8.3% decline, respectively. This Zacks Rank #3 (Hold) stock has also outperformed the S&P 500 Index’s 5.4% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Existing home sales increased 24.7% for July from a month ago, according to the NAR. This marked the strongest monthly gain in the survey’s history, buoyed by low mortgage rates. Total existing home sales — which include sales of single family homes, townhomes, condominiums and co-ops — grew 8.7% from July 2019, as reported by NAR.
Markedly, the July reading is the second month in a row of double-digit percentage sales gains. For June, existing home sales increased 20.7%, after witnessing months of sales decline due to coronavirus-led shutdowns.
NAR's chief economist Lawrence Yun said that the housing market is well past the recovery phase and is now booming, with home sales surpassing pre-pandemic levels.
Regionally, four major regions attained double-digit month-over-month growth. However, the Northeast registered a year-over-year decline.
Meanwhile, the supply of existing homes dropped 21.1% annually to 1.5 million homes for sale at July-end. This represents a 3.1-month supply at the current sales pace, down from a 4.2-month supply a year earlier. It’s the lowest July supply in the history of the inventory survey, which has been tracking single-family supply data since 1982.
Lawrence Yun added, “The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition.” He further said. “More homes need to be built.”
Declining Mortgage Rates a Boon for Homebuilders
The overall housing industry has been booming over the past few months, backed by declining mortgage rates and lower supply of existing homes for sales.
The 30-year fixed mortgage rate averaged 2.99% for the week ended Aug 20, up from 2.96% last week. Although U.S. mortgage rates ticked up last week, it is still down on a year-over-year basis. In the year-ago period, mortgage rates were 3.55%.
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