We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Existing Home Sales Rise in May, Housing Momentum Solid
Read MoreHide Full Article
Existing home sales in the U.S. rose 1.1% in May, after slipping 2.3% in April. This reinstates the fact that the U.S. homebuilding industry is still going strong. Existing home sales is a good indicator of demand which tracks both the number and prices of existing single-family homes, townhomes, condominiums and co-ops over a one-month period.
Delving Deeper
According to recently released existing home sales data by the National Association of Realtors, existing home sales increased 1.1% to a seasonally adjusted rate of 5.62 million units in May. Sales were 2.7% higher than the year-ago level, growing at the third-highest pace in the last one year.
Single-family home sales increased 1% to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April. Single-family home sales were also up 2.7% on a year-over-year basis. Existing condominium and co-op sales inched up 1.6% to a seasonally adjusted annual rate of 640,000 units in May and 3.2% year over year.
Notably, in the first quarter of 2017, total existing home sales rose 1.4% from the preceding quarter, marking the highest increase in a decade. This was also 5% higher than the corresponding period last year.
Given the low inventory situation, the median existing-home price for all housing types in May was up 5.8% year over year, marking the 63rd straight month of year-over-year gains. It is important to note here that existing home sales make up a large part of all U.S. homebuilding activity relative to new home sales.
Bottom Line
The 2017 outlook for homebuilding is quite compelling, given historically low mortgage rates, healthy demand, consistent job growth and solid homebuilders’ confidence. Although homebuilders’ confidence dipped slightly in June, it’s still above 50, which is encouraging. Although the Fed raised interest rates last week, mortgage rates remain at near historic lows. Through May 2017, the U.S. economy added jobs for the 80th straight month. The unemployment rate was 4.3% in May, the lowest since 2001.
Given the positive housing momentum, homebuilding stocks like M/I Homes, Inc. (MHO - Free Report) , Lyon William Homes , KB Home (KBH - Free Report) and M.D.C. Holdings, Inc. (MDC - Free Report) have the potential to grow further. M/I Homes carries a Zacks Rank #1 (Strong Buy) while the remaining three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
However, skilled labor shortages are a cause of concern as demand continues to increase. Meanwhile, rising land and labor costs are threatening margins as they limit homebuilders’ pricing power.
Looking for Ideas with Even Greater Upside?
Most of Zacks’ investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Existing Home Sales Rise in May, Housing Momentum Solid
Existing home sales in the U.S. rose 1.1% in May, after slipping 2.3% in April. This reinstates the fact that the U.S. homebuilding industry is still going strong. Existing home sales is a good indicator of demand which tracks both the number and prices of existing single-family homes, townhomes, condominiums and co-ops over a one-month period.
Delving Deeper
According to recently released existing home sales data by the National Association of Realtors, existing home sales increased 1.1% to a seasonally adjusted rate of 5.62 million units in May. Sales were 2.7% higher than the year-ago level, growing at the third-highest pace in the last one year.
Single-family home sales increased 1% to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April. Single-family home sales were also up 2.7% on a year-over-year basis. Existing condominium and co-op sales inched up 1.6% to a seasonally adjusted annual rate of 640,000 units in May and 3.2% year over year.
Notably, in the first quarter of 2017, total existing home sales rose 1.4% from the preceding quarter, marking the highest increase in a decade. This was also 5% higher than the corresponding period last year.
Given the low inventory situation, the median existing-home price for all housing types in May was up 5.8% year over year, marking the 63rd straight month of year-over-year gains. It is important to note here that existing home sales make up a large part of all U.S. homebuilding activity relative to new home sales.
Bottom Line
The 2017 outlook for homebuilding is quite compelling, given historically low mortgage rates, healthy demand, consistent job growth and solid homebuilders’ confidence. Although homebuilders’ confidence dipped slightly in June, it’s still above 50, which is encouraging. Although the Fed raised interest rates last week, mortgage rates remain at near historic lows. Through May 2017, the U.S. economy added jobs for the 80th straight month. The unemployment rate was 4.3% in May, the lowest since 2001.
Given the positive housing momentum, homebuilding stocks like M/I Homes, Inc. (MHO - Free Report) , Lyon William Homes , KB Home (KBH - Free Report) and M.D.C. Holdings, Inc. (MDC - Free Report) have the potential to grow further. M/I Homes carries a Zacks Rank #1 (Strong Buy) while the remaining three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
However, skilled labor shortages are a cause of concern as demand continues to increase. Meanwhile, rising land and labor costs are threatening margins as they limit homebuilders’ pricing power.
Looking for Ideas with Even Greater Upside?
Most of Zacks’ investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>