Homebuilder Shares Aim to Catch Up to Pace of Home Improvement Retailers

Homebuilder Shares Aim to Catch Up to Pace of Home Improvement Retailers There is a documented disparity occurring in this housing recovery: Shares of U.S. homebuilding companies are slumping as home improvement retailers are seeing surging sales. This is no surprise with more and more sites and companies like https://choosetoolbox.com offering tips and advice on how to improve your home.
Bloomberg for example, took notice of the diverging trends. It reported that homebuilders have seen shares of their companies fall more than 20 percent since May, a possible sign that investors see higher interest rates in the future, and that will likely hinder new-home sales.
The Standard & Poor’s Supercomposite Homebuilding Index — including PulteGroup, Lennar and nine other companies — has declined 21 percent since hitting the highest level in almost six years on May 14.
Meanwhile, the S&P 500 Home Improvement Retail Index — made up of Home Depot and Lowe’s — has risen 5.2 percent.
Furthermore, the Remodeling Market Index (RMI) from the National Association of Home Builders continued to climb at a modest pace in the third quarter of 2013 rising two points to 57, the highest reading since the first quarter of 2004, the NAHB reported last week.
An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than those who report it is lower.
The performance of these two sectors began to go separate ways after May 1, when Federal Reserve Chairman Ben Bernanke said the central bank was prepared to slow its stimulus program of $85 billion in monthly bond purchases in response to certain changes in inflation and the jobs markets. As of last week, the Fed’s policy makers are holding off on any tapering.
With a pullback in its stimulus back on the shelf for now, the homebuilding index has regained some of its losses and could “catch back up” with its home-improvement counterpart, Michael Shaoul, chairman and chief executive officer of Marketfield Asset Management in New York, told Bloomberg.

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