The Home Builders’ housing market index was expected to rise from 54 in November, to 56 in December, but December’s gains went up 4 points to 58. All three components in December gained, with a 6 point jump in present sales to 64. Sales 6 months out are at 62, which is up 2 points from November, although 6 points below August’s peak of 68. Traffic of prospective buyer lags at 44 but is up 3 points.
KB Home (KBH) stock was down 1.5% at 16.93 in a 52-week range of $14.93 to $25.14. The consensus price target is $19.20, and current year earnings per share are estimated at $0.60, which analysts expect to more than double to $1.25 in the next fiscal year. The price-to-earnings (P/E) ratio for the trailing 12 months is nearly 72, but that drops to 13.6 for the next year, a much more reasonable number. The price target implies a gain of more than 13%, compared with a rise of less than 4.5% in the past 12 months.
Lennar Corporation (LEN) will release its quarterly report on Wednesday. Higher mortgage rates had led shareholders into thinking homebuilding will have to fall as homes become less affordable. August-quarter results were quite optimistic, jumping 35%. Part of this gain has been due to their participation in key markets like Arizona, Nevada, and California, which are some of the fastest growing areas in the nation. Analysis Earnings Per Share Estimate is at $.062 for this quarter.