Homebuilders lead the HW 30

Strong profitability fuels sector, banks take massive hit

Homebuilders took flight on the HW 30 index of mortgage-finance related stocks Tuesday, as companies posted better than anticipated earnings.

A majority of companies in the sector saw the same story unfold this earnings season: new order growth continued to drag among builders, but they still posted profitability gains.

The direct result of profitability is two-fold: lower land acquisition costs and pricing power.

However, rising mortgage rates, extremely tight underwriting standards and reduced affordability remain headwinds for the sector.

Homebuilders didn’t let market setbacks stand in their way Tuesday, with all companies in the sector finishing up.

D.R. Horton (DHI) was the leader for the day, posting an impressive gain of 4.49% as investors fed off the company’s impressive earnings.

The homebuilder posted net income of $139.5 million for the fourth quarter, a 39% jump from $100.1 million a year earlier.

Feeding off the positive sector momentum, Lennar Corp. (LEN) also finished the day strong, up 1%, while homebuilder Toll Brothers (TOL) posted gains, rising 0.62%.

Banking institutions took a beating Tuesday after being the top HW 30 leaders on Monday.

Bank of America (BAC) underperformed for the day, dropping 0.56%, while JPMorgan Chase (JPM) also stopped short, declining 0.24%.

Additionally, Wells Fargo (WFC) was the biggest loser Tuesday, finishing the day down 1.11%.

Investors backed away from the mega banks as the updated list of the world’s too-big-to-fail institutions hit the market, putting Chase near the top of the list.

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please