Actions of home builders DR Horton (DHI), Lennar (LEN), Pulte Group (PHM) and Toll Brothers (TOL) traded at new cyclical highs on Monday morning March 29. Home KB (KBH) set its cycle at its highest on March 17. PulteGroup and Toll Brothers stayed below their monthly risk levels. The rest traded above their monthly pivots. Gains over the past year have been between 200% and 378%.
Homebuilder stocks are cheap when their price-to-earnings ratio is around 8%. Today, the P / E ratios are between 11.15% and 15.42%. Gains in stock prices and high P / E ratios are reasons enough to reduce holdings and take profits.
The National Association of Home Builders (NAHB) Housing Market Index (HMI) peaked at an all-time high of 90 (on a scale of 00 to 100) at the end of 2020. The S&P CoreLogic Case-Shiller 20 composite -City for home prices rose 11.1% year-on-year in January 2021.
Home prices are rising faster than the Consumer Price Index as the prices of lumber and concrete rise due to growing demand from home builders.
The graph of the NAHB HMI vs. single-family housing starts
The NAHB Housing Market Index ranges from zero to 100. A reading of 50 is neutral. A reading above 50 indicates a positive reading for home sales. A reading below 50 is a negative reading.
The Covid-19 pandemic caused the NAHB housing market index to drop from a record 42 points to 30 in April 2020. Homeowners living in urban areas have sold their homes to move to suburbs or more areas. rural. The theme is to live in houses with an additional room for an office. Many continued to work from home as the economy recovered from the lockdown. The HMI hit an all-time high of 90 at the end of 2020.
The S&P CoreLogic Case-Shiller 20-City composite in green.
Home prices continue to be in an inflating bubble. The last reading of the S&P CoreLogic Case-Shiller 20-City Composite is at the end of January 2021.
The 20-city composite index hit its first peak in July 2006. The trough occurred in March 2012. The drop totaled 35.1%. The current January reading is 79.4% above the March 2012 low.
Here is a dashboard for the top five home builders.
DR Horton: ($ 87.98 on March 30) has a positive but overbought weekly chart. The stock traded at $ 91.05 on March 29, testing its monthly risk level to $ 89.87. The quarterly, semi-annual and annual value levels are respectively $ 74.87, $ 67.27 and $ 65.40.
KB Home (KBH): ($ 45.51 on March 30) has a positive but overbought weekly chart. The stock traded at $ 47.37 on March 17, well above its monthly pivot of $ 42.91. Quarterly, semi-annual and annual pivots are $ 41.43, $ 39.30 and $ 32.05, respectively.
Lennar (LEN): ($ 100.31 on March 30) has a positive weekly chart. The stock traded at $ 104.53 on March 29, well above its monthly pivot of $ 93.99. The quarterly, semi-annual and annual value levels are respectively $ 81.55, $ 72.68 and $ 69.51.
Pulte Group (PHM): ($ 51.75 on March 30) has a positive weekly chart. The stock traded at $ 53.66 on March 29 against its monthly risky level of $ 53.91. The quarterly, semi-annual and annual value levels are respectively $ 45.97, $ 43.19 and $ 40.13.
Toll Brothers (TOL): ($ 56.84 on March 30) has a positive but overbought weekly chart. The stock traded at $ 59.52 on March 29 against its monthly risky level of $ 60.77. The semi-annual, annual and quarterly value levels are respectively $ 47.40, $ 43.89 and $ 42.81.