SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 19, 2012 08:20 ET

KB Home and Hovnanian Enterprises Shares Surge After Commerce Department Reports Home Construction at a 4-Year High

The Paragon Report Provides Stock Research on KB Home and Hovnanian Enterprises

NEW YORK, NY--(Marketwire - Oct 19, 2012) - Homebuilder's have continued to impress investors with gains in 2012 as data supporting the U.S. housing market's recovery continues to pour in. The iShares Dow Jones U.S. Home Construction Index Fund (ITB) and the SPDR S&P Homebuilders ETF (XHB) year-to-date have gained Over 70 percent and 50 percent, respectively. The Paragon Report examines investing opportunities in the Residential Construction Industry and provides equity research on KB Home (NYSE: KBH) and Hovnanian Enterprises, Inc. (NYSE: HOV).

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On Wednesday the Commerce Department reported U.S. home construction hit a 4 year-high of 872,000 after soaring 15 percent in September. Construction permits also saw a double-digit increase jumping 12 percent to an annual rate of 894,000, an increase of 93.4 percent over last year. The increase was the largest yearly gain in nearly 20 years.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," wrote Dan Greenhaus, chief global strategist at BTIG LLC.

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"We're seeing a much better attitude among buyers," Mr. Perry said. "People feel like home prices are rising, and mortgage rates are very low, so before prices rise too high, people want to get in on it."

One reason for the surge in building has been lower inventories of previously-owned homes and foreclosed homes, which usually sell at discounted prices. The National Association of Realtors last month reported at the current pace it would take approximately 6.1 months to sell all of the listed homes, a decrease from 8.2 months a year ago.

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