Lennar Corp.'s fourth-quarter results are having a big impact on U.S. home building stocks: The S&P industry group rose 5.2 per cent on Wednesday amid the latest signs that the housing market is showing signs of life. In the case of Lennar, it reported that new orders rose 20 per cent in the fourth quarter from a year ago, suggesting that demand for new homes is on the upswing.
Of course, this isn't the first rustling among home builders. The group has surged 80 per cent since the start of October, with big gains by PulteGroup Inc. and D.R. Horton Inc. contributing to the gains as well. Part of the earlier pickup was due to upbeat news on the U.S. housing sector – particularly the rise in housing starts in November and rising builder confidence.
Bloomberg News quoted Lennar's chief executive as sounding upbeat as well: "As I look ahead to 2012, I'm cautiously optimistic that we're seeing a real bottom form and we're beginning to see a recovery. I feel that stabilization will emanate from the most desirable markets and spread slowly outward."
Despite the strong gains by the S&P 500 homebuilder index, it is still 77 per cent below its high in 2005.