Homebuilder stocks LGI Homes (LGIH), KB Home (KBH) and Pulte Group (PHM) surged Monday after a measure of homebuilder sentiment matched its best level since the housing boom.
The National Association of Homebuilders/Wells Fargo Housing Market Index surged to 65 in September, according to preliminary data. That was up from a revised August reading of 59. That matched the best level of homebuilder sentiment since October. It hasn't been higher since October 2005.
Prior months this year have shown readings in the high 50s to low 60s. Any reading above 50 indicates upbeat sentiment.
The results come as the Federal Reserve appears unlikely to decide to raise rates this month, potentially keeping interest rates on loans lower. Homebuilder stocks had tumbled earlier this month, in part on fears of a more hawkish Fed. Fed policymakers meet on Tuesday and Wednesday.
The brighter sentiment also comes as the economy continues to add jobs and census data showed that median U.S. household income grew 5.2% last year, even though many parts of the country continue to struggle compared with decades past.
KB Home advanced 2.8% to 15.30 in the stock market today, but found resistance at the 50-day line after rising as high as 15.77 in the morning. The stock is making its way through a flat base with a 16.86 buy point. KB reports third-quarter earnings on Tuesday.
IBD'S TAKE: As homebuilder sentiment improves, so do homebuilder stocks. See which stocks in the sector could be gearing up for a breakout.
Lennar (LEN), which also reports results on Tuesday, rose 1.7% to 45.09. It has been consolidating for months, and there's no clear entry on the chart.
LGI Homes rose 0.9% to 35.95 after testing support at its 50-day line last week.
Pulte Group rose nearly 2%. Shares are forming a flat base with a 22.50 buy point, but they remain around the lows of the pattern.
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