New-Home Sales Are Surging. Why Aren’t Existing Homes As Hot?

Home builders are reporting that sales of newly built homes so far this year are going gangbusters. But other gauges of the housing market, such as sales of existing homes, are far more tepid.

So, which view is more reliable as the busiest months of the spring home-selling season approach?

The answer isn’t entirely clear, but economists and analysts say the builders’ reports provide a reasonably sound sign that this spring season has gotten off to a solid start. Investors are encouraged, having pushed up the Dow Jones U.S. Home Construction Index of six home-builder stocks by 10.8% so far this year, excluding dividends.

Builders delivered more encouraging signs Tuesday. Meritage Homes Corp. said it landed contracts in January to sell 606 homes, a 48% increase from a year earlier. Also Tuesday, luxury builder Toll Brothers Inc. reported that its orders so far in February are 13% greater than a year ago, following its 16% gain in orders for its fiscal quarter ended Jan. 31.

Investors were pleased with Toll for the order increase and its better-than-expected margins and earnings. Toll’s stock was at $38.61 in mid-afternoon trading, up $1.51, or 4%. Meritage’s stock was at $44.31, up $2.47, or 5.9%.

via New-Home Sales Are Surging. Why Aren’t Existing Homes As Hot? – Real Time Economics – WSJ.

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