Photo courtesy johnsonteamrealestate.com
Home sales seem to be slipping after a spring rebound and experts point to two reasons: rising prices and interest rates. June sales, while near a three-and-a-half-year high, fell 1.2 percent in June from a May sales rate that was the highest since November 2009.
A report in the July 30 Los Angeles Times noted that first time home buyers are particularly affected, as are those with little cash for a down payment. First-time buyers accounted for 29 percent of U.S. homes sales in June, way down from the usual 40 percent.
Part of the reason first-time buyers are being squeezed out are the many cash buyers, in many cases investors, in the current market, according to the Times report.
The slumping home market is reflected in the prices of small cap housing stocks, based on a cursory look at some of the names we have been following.
Red Bank, NJ-based Hovnanian Enterprises (NYSE: HOV, http://www.khov.com/) specializes in single-family detached homes, condominiums and town homes and operates in two segments: homebuilding and financial services. HOV closed May 28 at $6.15 with a market cap of $856 million. On July 30 HOV closed at $5.21, up one cent for the day with a market cap of $725 million. Its 52-week trading range is $2.23-$7.43.
Los Angeles-based KB Home (NYSE: KBH, http://www.kbhome.com/) is a home building and financial services company catering in large part to first time buyers. KB is an old Southern California home builder, founded in 1957 and formerly called Kaufman and Broad. KBH closed May 28 at $23.16 with a market cap of $1.9 billion. On July 30 KBH closed at $16.92, up 6 cents for the day with a market cap of $1.4 billion. Its 52-week trading range is now $9.04-$25.14.
Columbus, OH-based M/I Homes Inc. (NYSE: MHO, http://www.mihomes.com/) builds single family homes primarily in the Midwest, Mid-Atlantic and southern parts of the U.S. The company was founded in 1973 and, like most of the other builders, has homebuilding and financial services divisions. MHO closed May 28 at $26.47. On July 30, MHO closed at $20.92, down 10 cents for the day with a market cap of $505.7 million. Its 52-week trading range is $16-$29.07.
Atlanta-based Beazer Homes USA (NYSE: BZH, http://www.beazer.com/) builds and sells single-family and multiple-family homes in 16 states in the U.S. It also acquires, improves and rents homes. The company operates through commissioned home sales counselors and independent brokers. On May 28, BZH closed at $21.79 with a market cap of $547 million. On July 30 BZH closed at $16.93, down 26 cents for the day with a market cap of $425 million. Its 52-week trading range is $3.46-$23.29.
Irvine, CA-based Standard Pacific (NYSE: SPF, http://www.standardpacifichomes.com/) builds single family and detached homes and targets a wide range of homebuyers. It also provides mortage financing services through its mortage finance subsidiary, Standard Pacific Mortgage. SPF closed May 28 at $9.52 with a market cap of $2.1 billion. On July 30 it closed at $7.93, down 11 cents for the day with a market cap of $2.2 billion. Its 52-week range is $5.53-$9.97.
Westlake Village, CA-based The Ryland Group (NYSE: RYL, http://www.ryland.com/) is a homebuilder and mortage finance company. RYL covers many aspects of the home buying process including design, construction, title insurance and escrow. RYL closed May 28 at $47.60 with a market cap of $2.2 billion. On July 30 RYL closed at $38.39, up 22 cents on the day, with a market cap of $1.8 billion. Its 52-week trading range is $23.04-$50.42.