Homebuilders captured Wall Street’s attention Tuesday as optimistic home price and sales reports breathed new life into the sector’s stocks.
The day kicked off with the Standard & Poor’s Case-Shiller showing average annual home price increases of 11.6% and 12.1%, respectively, for the 10-city and 20-city composite indices in its most recent report.
Shortly thereafter, the Census Bureau and the Department of Housing and Urban Development released data showing May single-family home sales inched up 2.1% month-over-month and 29% from year ago levels.
As a result, homebuilder stocks soared throughout the day, with PulteGroup (PHM) experiencing nearly a 4% surge.
Sterne Agee analyst Jay McCanless said despite intense discussions over the possibility of escalating rates tempering home sales,”the interest level in the homebuilder group remains fairly high.”
“I think people realize that builders can still sell a home at a fast clip even with higher interest rates,” McCanless told HousingWire.
In fact, home purchasers are fitting comfortably within their new purchases, often ending up in very safe deals.
“Buyers are generally overqualified for the home they end up purchasing,” McCanless added. “I think people are realizing that higher rates don’t necessarily mean the end of the housing rally.”