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), Toll Brothers Inc (TOL) & Nine Homebuilders That Soared This Week

One of the hottest sectors this past week was housing. Things certainly didn’t start out that way. One of the industry’s bellwethers posted disappointing quarterly results on Monday with revenue and earnings growth falling well short of analyst expectations.

PulteGroup, Inc.But investors hungry for a second opinion got substantially better news when D.R. Horton, Inc. (NYSE:DHI) — the country’s largest homebuilder — posted blowout quarterly results. Revenue soared 49%, and profitability skyrocketed 173% higher.

Most indications point to a speculative market in which potential homebuyers are rushing to lock in home prices before they head even higher. The National Association of Realtors reports that the average home is on the market for just 62 days, an entire month shorter than the average of 91 days a year earlier. The association also reported that home prices rose 11.8% last month, and that’s the largest year-over-year increase since 2005.

This has all of the makings of another housing bubble, but investors didn’t care. They dove into the residential property developers last week, with several companies cranking out double-digit percentage gains.

Company April 26 Weekly Gain
D.R. Horton $26.66 21%
PulteGroup (NYSE:PHM) $21.35 19%
Meritage Home $49.26 19%
M/I Homes $25.10 18%
Hovnanian Enterprises (NYSE:HOV) $5.67 15%
KB Home (NYSE:KBH) $23.04 13%
M.D.C. Holdings $38.18 13%
Toll Brothers (NYSE:TOL) $34.69 12%
Lennar $42.30 11%

Source: Barron’s.

We’re not just talking about a week of gains here. PulteGroup, Inc. (NYSE:PHM), KB Home (NYSE:KBH), and Hovnanian Enterprises, Inc. (NYSE:HOV) more than doubled last year. Hovnanian Enterprises, Inc. (NYSE:HOV) saw its stock soar 363% in 2012!

It probably isn’t a surprise to see luxury homebuilder Toll Brothers Inc (NYSE:TOL) doing so well in this climate. High-end retailers have held up surprisingly well at this stage of the economic turnaround, so it’s not a shock to see the affluent taking advantage of historically low rates to jump on freshly constructed properties. However, Pulte, KB Home (NYSE:KBH), Hovnanian, and D.R. Horton cater to mainstream homebuyers merely looking for a place to call their own after years of renting.

It may not get any easier from here, but investors probably felt that way at the end of last year. Hovnanian has given up some of last year’s gains, but most of the other developers have only padded their already impressive 2012 returns. KB Home is already trading 46% higher in 2013 after more than doubling last year.

The pent-up demand is there for new homes, but investors should be looking out for any signs that the bubble will burst. The last thing they want is to be smack-dab in the middle of a sudsy mess.

The article 9 Homebuilders That Soared This Week originally appeared on

Longtime Fool contributor Rick Munarriz and The Motley Fool have no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.