Investing.com - Financial Markets Worldwide

Home-Builders Hold More Than The Keys To The Front Door

Published 02/05/2013, 01:20 AM
Updated 07/09/2023, 06:31 AM
LEN
-0.61%
SHW
1.90%
HD
1.62%
IMOB
-2.46%
MHK
-0.89%
BZH
-0.62%
RYL
0.00%

One of the leading stock sectors in 2012 was the home-builder stocks. This industry group has rebounded sharply higher since October 4, 2011.

Many of the leading stocks in the sector have doubled or more over the past year. This type of action in the home-builder stocks tells us that the central banks are trying their best to create another housing boom. The Federal Reserve Bank announced in September 2012 that they will buy $40 billion in mortgage backed securities (MBS). They are also buying $45 billion in U.S. Treasuries to try and keep interest rates artificially low.

Low interest rates will help many of the private equity funds to pick up real estate at a very low borrowing rate. These private equity groups will then rent out the property at a premium. Individual home buyers can also receive a good interest rate if they can qualify for a loan. Either way, the central banks are trying everything they can to cause a housing rebound.

Some of the leading stocks in the home-builder sectors include Lennar Corp (LEN), The Ryland Group, Inc (RYL), and Beazer Homes USA Inc (BZH) just to name a few. Other leading stocks that are tied to the home-builder recovery include Sherwin-Williams Company (SHW), Mohawk Industries Inc (MHK), and The Home Depot Inc (HD). All of these stocks are just off of their 52- week highs.

Should the home-builder sector start to falter it could signal real trouble for this four year stock market recovery that began in March 2009. Traders must remember the last time the central banks lowered interest rates to try and inflate the economy via the housing market was in 2002. That move in 2002 lead to the recession in 2008.

LEN

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.