For Immediate Release
Chicago, IL - March 17, 2016 - 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 PulteGroup, Inc. ( PHM ), KB Home ( KBH ), Lennar Corporation ( LEN ) and D.R. Horton, Inc. ( DHI ) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Wednesday's Analyst Blog:
Builder Confidence Steady in March, Labor Shortage Hurts
Homebuilders' sentiment index remained steady in March amid labor constraints and rising costs. The reading was lower than market expectations of slight improvement.
Homebuilders' confidence for new single-family homes, as indicated by the National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI), remained steady at 58 in March per data releasedon Tuesday. Though readings have remained above mid-50s for the past many months - indicating slow but steady recovery in the housing market - builders, in general, are facing problems regarding the recent labor shortage and rising land and labor costs.
A shortage of buildable lots, skilled labor and available capital for smaller builders are limiting home production, thereby lowering the inventory of homes, both new and existing. Limited capital for land and land development has left entitled lands in short supply while increasing demand drove land prices higher. The labor market has also tightened with limited availability of labor arresting the rapid growth in housing production. Labor shortages are leading to higher wages while land prices are inflating due to limited availability. Rising building materials and labor costs are threatening homebuilders' margins as they limit pricing power.
After a more or less good run in 2015 - possibly the best since 2007 when the housing recession set in - the housing market had a shakier start in 2016 amid equity market volatility and global worries.
The housing data released for Jan 2016 has been rather mixed. Housing starts declined 3.8% and building permits fell 0.2%, according to data released on Feb 17. New home sales fell 9.2% which was below market expectations. However, existing home sales touched a 6-month high, increasing 0.4% in the month to a seasonally adjusted annual pace of 5.47 million, per data released by the National Association of Realtors last month. Housing data for February should be available later this month.
Despite the recent weak data, overall fundamentals of the market remain positive for the rest of the year. Construction activity is expected to pick up once the spring selling season is in full swing. Steady job and wage growth, recovering economy, historically low interest/mortgage rates, rising rentals, rapidly increasing household formation and a limited supply of inventory - all point to consistently strong demand in 2016.
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