Are Increasing Home Sales Helping Homebuilder Stocks?

The National Association of Realtors (NAR) announced its Pending Home Sales Index gained 0.3 percent to 99.5 in the month of September, a less-than-expected, albeit still positive, improvement for the housing market.

The number of contracts signed to purchase existing homes rose much more modestly than economists had expected, but any sort of gain is still a step in the right direction after a decline of 2.6 percent in August. Experts surveyed by Reuters had forecast a rise of some 2.1 percent in signed contracts.

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“This means only minor movement is likely in near-term existing home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013,” said Lawrence Yun, chief economist for the NAR.

Thursday’s housing market news builds on good feelings brought on by a release from the day before that showed new home sales in the U.S. jumped 5.7 percent in September to the highest level in over two years. Increasingly positive figures like these have experts believing the housing market is finally on the mend.

Still, homebuilder stocks have not seemed to benefit from the recent string of optimistic housing data reports, and speculation exists that perhaps they have been overbought and overvalued. Shares were generally trading down across the board led by PulteGroup (NYSE:PHM), Toll Brothers Inc. (NYSE:TOL), and Lennar Corp. (NYSE:LEN).

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