Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

PulteGroup, Inc. (PHM), Weyerhaeuser Company (WY): Positive Signs Abound for Housing

Page 1 of 2

PulteGroup, Inc.The recovery in the housing market is continuing its slow and steady recovery. The most recent data point showed pending home sales rising by 1.5% in March which reverses the February decline. According to the National Association of Realtors the pending home sales index increased to 105.7 in March from the 104.1 it hit last month. This represents a solid 7% year-over-year increase for the index.

Overall, the association’s chief economist, Lawrence Yun, pointed out that “contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply.” He sees closings ending up modestly as the year progresses. All of which points to continued modest gains for a housing market that’s been lackluster for the past few years.

Looking ahead, my wife and I are personally going to become statistics. Our home, which went on the market at the end of last month, is now under contract and will be one of what we all hope is an even larger number of pending home sales for April. Like the many Americans putting their homes on the market these days, I’m excited that the market is tight right now as we were able to get a fair price for our home which went under contract surprisingly fast. However, a more robust market is what our economy could really use these days.

These positive trends in housing have really affected homebuilders. Just last week PulteGroup, Inc. (NYSE:PHM) noted in its earnings report: “The stronger demand which the housing industry saw throughout 2012 has carried into the spring selling season of 2013. We experienced higher traffic in our communities with buyers feeling a greater sense of urgency given the combination of limited product inventory and rising prices found in many markets throughout the country.”

That contributed to a 35% year-over-year increase in revenue for the company. Further, the company saw a 10% increase in the average selling price which really helped pad its bottom line. Overall, margins improved by 420 basis points to 22.9% over last year.

Not only are homebuilders benefiting but this improvement in housing has had a nice effect on the bottom line of forestry companies. Weyerhaeuser Company (NYSE:WY) saw its first-quarter earnings more than triple as its wood products business reported its strongest quarterly earnings since 2005. Industry peer Rayonier Inc. (NYSE:RYN) also experienced a successful first quarter as its income from continuing operations nearly doubled year over year from $52 million last year to $103 million.

Page 1 of 2
Loading Comments...