Disclosure: I have no positions in DR Horton, KB Home, Lennar, Pulte or Ryland.
Shares of most homebuilders bottomed on Oct. 13, two days before the major equity averages helped by steady homebuilder sentiment and stable single-family housing starts.
On Friday, the U.S. Department of Housing and Urban Development reported that New-Home Sales for September edged up 0.2% from a downwardly revised level in August. The August rate was revised to an annual rate of 466,000 units from 504,000 and the September rate was reported at 467,000 units.
The National Association of Home Builders gave a positive assessment to this data saying that new home sales “demonstrate steady growth in the housing market,” and that “consistent job creation and low mortgage interest rates are spurring the release of pent-up consumer demand."
Homebuilders are adding to inventory of new homes, which is currently at 207,000 units, a 5.3-month supply at the current sales pace. The NAHB considers this a sign that builders are confident above the future of the market for new single-family homes.
Here are five homebuilders that are rated buy according to www.ValuEngine.com.
DR Horton (DHI) ($22.96) was down 12.7% year to date on Oct. 13 and is up 17.8% since than with a one-year price target at $25.17.
The weekly chart stays positive given a close this week above its five-week modified moving average at $21.56. Semiannual risky levels are $23.01 and $27.27.
KB Home (KBH) ($16.43) was down 24.6% year to date on Oct. 13 and is up 19.2% since than with a one-year price target at $17.14.
The weekly chart stays positive given a close this week above its five-week modified moving average at $16.01. The Oct. 13 low held my semiannual value level at $13.79 with a semiannual risky level at $17.76.
Lennar Group (LEN) ($43.76) was down 4.9% year to date on Oct. 13 and is up 16.3% since than with a one-year price target at $47.64.
The weekly chart stays positive given a close this week above its five-week modified moving average at $40.50. Semiannual risky levels are $44.34 and $49.42.
Pulte Group (PHM) ($19.54) was down 18.2% year to date on Oct. 13 and is up 17.3% since than with a one-year price target at $20.51.
The weekly chart stays positive given a close this week above its five-week modified moving average at $18.48. A semiannual value level is $16.15 with a semiannual risky level at $20.51.
Ryland Group (RYL) ($35.97) was down 30.1% year to date on Oct. 13 and is up 18.6% since than with a one-year price target at $38.91.
The weekly chart stays positive given a close this week above its five-week modified moving average at $34.88. Semiannual pivot is $35.95 with a semiannual risky level are $44.96.
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Richard Suttmeier is CEO and founder of Global Market Consultants, Ltd, a contributor to TheStreet.com and consultant to ValuEngine.com.
