D.R. Horton, Inc. (DHI), The Home Depot, Inc. (HD): A Solid Bet For the Increase In Demand For Housing

Page 1 of 2

Is the housing market really rebounding? Many think so, and the numbers seem to be pointing towards a “yes.” According to Gus Faucher, a senior economist at PNC Financial Services (NYSE:PNC):

“The fact that single-family starts are up is very encouraging, it is more important to the economy in terms of employment and growth… The housing market recovery is continuing and will be an important contributor to economic growth. Permits look very solid, and that is a great sign.”

In January, ground was broken on the most U.S. single-family homes in more than four years, with work beginning on 613,000 single-family houses at an annual rate– the most since July 2008.

D.R. Horton, Inc.The homebuilders

In the same month of January, builders issued over $2 billion in debt and equity. $6.3 billion of debt was issued in total last year– the most in recorded history.  D.R. Horton, Inc. (NYSE:DHI), the nation’s largest homebuilder by volume, reported a 139% increase in net income at the end of their most recent quarter, with homebuilders revenue rising 39% year-over-year. The company’s Chairman of the Board, Donald R Horton chimed in by saying that:

“This quarter was our most profitable first quarter since 2007, with $107.9 million of pre-tax income, a 270% increase from the year-ago quarter. We experienced substantial increases in the number of homes sold, closed and in backlog compared to the year-ago quarter. At the same time, our average sales price has increased due to pricing power, geographic mix and larger average home size. As a result, we achieved dollar value increases in homes sold of 60%, homes closed of 38% and backlog of 80%.”

Mr. Horton also cited increasing demand and his company being “the best positioned it has been in its 35 year history”. The company seems bullish on homebuilding due to demand, but is this demand really there? Or should we be a little more skeptical, like Joel Shine, chief executive officer of Woodside Homes, who said that he “hope[s] the housing market is as good as the capital market seems to think it is,” explaining that “Right now, housing is the pretty girl at the bar.”

Demand is picking up

The demand  is increasing, and this demand may even be sustainable as long as there are more buyers than sellers. Home prices seem to be rising, primarily due to low supply. The number of available homes for sale fell to a 13 month low in January according to the Wall Street Journal, and Greg McBride, senior financial analyst at Bankrate.com, claimed that, ”On a national scale, the market is clearly rebounding… It’s not that the prices are crazy, but the buyers outnumber the available homes for sale.”

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!