SOURCE: Five Star Equities

Five Star Equities

July 27, 2012 08:20 ET

U.S. Homebuilders Fall as New Home Sales Unexpectedly Fall in June

Five Star Equities Provides Stock Research on Lennar and Hovnanian Enterprises

NEW YORK, NY--(Marketwire - Jul 27, 2012) - Homebuilder stocks have been on an impressive rally as the U.S. housing market has been on a slow but steady recovery in 2012. The Standard and Poor's Supercomposite Homebuilding Index (S15HOME) is up over 40 percent year-to-date. Homebuilders took a hit Wednesday after government data showed new home sales unexpectedly declined in June. Five Star Equities examines the outlook for companies in the Residential Construction Industry and provides equity research on Lennar Corporation (NYSE: LEN) and Hovnanian Enterprises, Inc. (NYSE: HOV).

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After reaching a two-year high in May new home sales fell sharply in June. The Commerce Department on Wednesday reported that new home sales fell 8.4 percent to a seasonally adjusted rate of 350,000. While the steep drop was unexpected, sales in June are still 15 percent higher than a year ago. Other indicators throughout the year have signaled a U.S. housing market recovery and as a result builders have been more confident in breaking ground on new homes.

"While a housing recovery is under way, it is most certainly not 'all good,'" Dan Greenhaus, BTIG's chief global strategist, said in a note to clients. "Fits and starts are to be expected, and clearly this summer is one of the 'fits.'"

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Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. The company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Revenues from home sales increased 23 percent in the second quarter of 2012 to $796.4 million from $649.8 million in 2011. Shares of Lennar are up nearly 50 percent year-to-date.

Hovnanian Enterprises is one of the nation's largest homebuilders with operations in approximately 17 states. Total revenues were $341.7 million for the second quarter of fiscal 2012 compared with $255.1 million in the second quarter of the previous year. Shares of the company have soared over 60 percent this year.

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