PulteGroup, Inc (NYSE:PHM) not doing a volte face any time soon

Posted by Michael Korte August 19, 2013 0 Comment 705 views

The NAHB housing market index rose by 3 points from the downwardly-revised 56 in the month of July to 56, this August. The reading for July had been the highest for this index since 2006 January. A reading below 50 is an indicator that a greater number of builders consider sales to be poor against those that think they are good. This reading was above the expected reading of 57.

Sub-index levels

In July, the sub-indexes that measure current-sales expectations and conditions stood at 62. The reading on sales projections increased by one point to 68. The sub-index that is an estimation of prospective-buyer traffic stayed steady at 45. The sales-expectations reading is the highest since 2006 March. Early last week, the NAHB had reported that housing-affordability had dropped right across the country.

In the Q2 of this year, 63.3% of existing and new homes sold could be afforded by families who had a $64,000 median income which was a dip from the 73.7% that they stood at in the Q1. Increasing mortgage loan rates and home prices have started to take their toll on the sales of homes. There was a peak in the prices of shares of publicly-traded builders with PulteGroup, Inc (NYSE:PHM) gaining as much as 90%, D.R. Horton Inc had risen by around 50%, Toll Brothers had ascended 42%. Since mid-may they all are down in the range of 13%-40%.

Buyers treading lightly

Since May, the 30 year fixed-mortgage rate has risen by more than one full point. Though the rates stay 4.5% or lower, buyers are now more cautious. In most regions, home prices stay well-below the peaks they experienced even though there was a rise in prices. Buyers are getting smarter and know that the sub 4 percent mortgage rates are not going to be returning in a hurry. They are going to be more cautious primarily due to the cloud of uncertainty that hangs above the United States economy.

About Michael Korte

Michael Korte an investigative reporter at GDP Insider and is a breaking news reporter. Michael work includes investigations of misconduct by federal prosecutors and industrial air pollution around the nation's schools. His reporting has been recognized with the Hillman Prize for Newspaper Journalism, the Grantham Prize for Excellence in Reporting on the Environment, and the Philip Meyer Journalism Award for reporting that incorporates social science methods.

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