What to expect
UCP LLC and William Lyon Homes are two home builders exploring initial public offerings. Tri Pointe Homes Inc (NYSE:TPH) was the first home builder to file an IPO in almost nine years. The market is welcoming back these companies and investors are taking note. Pay attention to Tri Pointe Homes Inc (NYSE:TPH) and Taylor Morrison Home Corp (NYSE:TMHC) as they prove their worth with home expansions this year.
These new IPOs have two strong forces fueling their growth this year: the number of houses for sale and the average price of homes for sale. The number of homes on the market is 10% higher than one year ago. The cycle of home sales goes from newly manufactured homes to resales to short sales. Short sales represented only 24% of total sales last month. At the same time last year, they represented 33%. As fewer short sales make up total purchases, home sales will shift up in the cycle.
The average sale price for a home on the market is $173,000. This price is up 11% from last year. As home prices rise, manufacturers have the ability to sell homes at a higher price and grow their gross margins. Also, with higher sale prices, homeowners who are looking to upgrade their homes will have more capital to spend on a new home.
Clearly these homebuilder IPOs have a lot going for them this year.
The article Check Out these New IPOs originally appeared on Fool.com and is written by Austin Higgins.
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