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The Zacks Analyst Blog Highlights: Lennar, PulteGroup, Toll Brothers and D.R. Horton

For Immediate Release

Chicago, IL - August 27, 2015 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Lennar Corporation ( LEN ), PulteGroup, Inc. ( PHM ), Toll Brothers, Inc. ( TOL ) and D.R. Horton, Inc. ( DHI ).

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Here are highlights from Wednesday's Analyst Blog:

July New Home Sales Rise a Balm for Jittery Global Nerves

New home sales rose in July - giving the U.S. market something to cheer about even as stocks continued to sell off.

Also, consumer confidence rebounded in August after the decline in July, pointing to the underlying strength in the U.S. economy despite the recent correction.

China's struggling economy, rising wage rates and currency devaluation have cast the global markets in turmoil over the past one week.

In its midst, the U.S. Census Bureau and the Department of Housing and Urban Development released data on Aug 25 which showed that sales of new single-family homes increased 5.4% to a seasonally adjusted annual rate of 507,000 units in July from a revised June number of 481,000. The number represents a 25.8% improvement from the year-ago month.

New home inventory for sale was 218,000 units at the end of July. This is a 5.2-month supply at the current sales pace, improving slightly from June levels. The median sales price climbed around 2% year over year to $285,900 in July.

Housing data released this month has also been positive. Housing starts improved 0.2% to a seasonally adjusted annualized rate of 1.21 million units in July - the highest level in nearly eight years. Homebuilders' sentiment in August, per data released by the National Association of Home Builders (NAHB), scaled the highest level in almost a decade - thanks to the steadily improving U.S. housing market.

After a lull in the housing sector in the first quarter, construction activity picked up in the crucial spring/summer months, supported by an improving economic environment and better employment scenario.

Higher job numbers, a recovering economy and improving consumer confidence, moderating home price gains, affordable interest/mortgage rates, rising rentals, recent federal initiatives to increase mortgage availability and a limited supply of inventory - all point to a heady pace of growth in the housing market in the second half.

With stabilizing demand, housing price gains are also moderating. Moreover, housing should remain an affordable option in 2015 as mortgage rates are below historical levels. Even if mortgage rates rise next month - as is widely anticipated - the rates are expected to remain reasonable. Low mortgage rates and moderating home price gains give homebuyers the much-needed confidence, in turn increasing home demand.

On the other hand, apartment rental rates are continuing to move up, making home buying a more attractive option. Moreover, millennial buyers are moving out of shared living arrangements and into their first homes, resulting in a dramatic increase in the rate of household formation. This has also sparked housing demand.

Further, there is a production deficit of both rental and new homes as compared to demand - always a favorable scenario for the builders.

To add to the positives, plans from the White House to cut premiums on mortgage insurance should increase mortgage availability and thereby encourage home buying among first-time buyers. With oil prices remaining subdued and the job market looking good, it's time to buy that dream home.

Despite the positive new home sales data, shares of major homebuilders like Lennar Corporation ( LEN ), PulteGroup, Inc. ( PHM ), Toll Brothers, Inc. ( TOL ) and D.R. Horton, Inc. ( DHI ) declined on Tuesday due to the broader market sell-off. Nevertheless, many homebuilders sport a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy).

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LENNAR CORP -A (LEN): Free Stock Analysis Report

PULTE GROUP ONC (PHM): Free Stock Analysis Report

TOLL BROTHERS (TOL): Free Stock Analysis Report

D R HORTON INC (DHI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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