Home building slows in March, but permits Jump (KBH, LEN, TOL, RYL, BZH, PHM)
U.S. builders initialed work on new homes in March at slower pace, but the number of construction permits soared to their highest level in 3.50 years.
Housing starts declined 5.8% to an annual rate of 654,000 last month, well below economists’ estimates of rise to 703,000. The data are seasonally adjusted. Housing starts in February were also revised down slightly, to 694,000 from 698,000 previously.
However, building permits surged 4.5% to 747,000 in March from a revised 715,000 in February, mainly because of a spike in requests to construct multi-dwelling buildings with five units or more.
The latest rise in permits suggests builders are becoming increasingly optimistic after the industry’s worst slump in modern times. Multi-dwelling permits jumped 24.2% to 262,000 for that often-volatile category.
Over the past one year, housing starts are up 10.3%. New construction of single-family homes has risen a slightly faster 10.5% in that span.
KB Home (NYSE:KBH) shares are up 1.91% to $8.02. Recently the company lowered its quarterly dividend 60% as the firm seeks to free its cash to take better benefit of an improving housing market.
The cut lowers the company’s quarterly payment to 2.5 cents per share, against 6.25 cents per share, and will save the firm almost $11.6 million a year.
Lennar Corporation (NYSE:LEN) climbed 0.85% to $26.01. On Friday, analyst at upgraded the stock to buy from hold, citing an improved outlook on housing demand fueled by local job growth. The firm also upgraded Toll Brothers, Inc. (NYSE:TOL) and PulteGroup, Inc. (NYSE:PHM) to buy from hold. Shares of TOL are up 1.25% and PHM added 3.44%. Yesterday, analyst at Raymond James upgraded TOL from a “market perform” rating to a “strong-buy” rating.
The Ryland Group, Inc. (NYSE:RYL) surged 1.44% to $18.29. Yesterday, analyst at Raymond James upgraded the stock from an “underperform” rating to an “outperform” rating.
Beazer Homes USA, Inc. (NYSE:BZH) was up 2.11% to $2.91.