Housing Recovery Expanding

The recovery in the housing market is showing itself beyond just rising new and existing-home sales and home price increases.

Home builder stocks, for example, have become srovme inome of the strongest performers of the year in the stock market. Some home builder stocks, like Pulte Group, have even more than doubled in the last year.

With home prices showing signs of stabilizing or even rising too, more home owners also are investing in their homes, either remodeling or purchasing new furniture or appliances, says Brian E. Peery, co-manager of the Hennessy Cornerstone Growth fund. For example, home improvement items like cabinets and plumbing fixtures are seeing sales volumes rebound.

“It does appear we’ve turned the corner and a housing recovery is under way,” says Bradley B. Thomas, an analyst at KeyBanc Capital Markets. “We continue to expect recovery over the next three to five years, if not five to 10 years.”

While the progress has been undeniable in the overall housing market recovery, Thomas points out several challenges remain, such as credit remains tight for those trying to qualifying for financing, and a large inventory of foreclosures continuing to threaten the market. Also, new home construction is still nearly 50 percent below the average monthly level it has been for the last 30 years.

“After having overbuilt for a number of years,” adds David D. Weaver, a co-manager of the Adams Express closed-end equity fund. “We have probably underbuilt recently.”

Source: “Ways to Play a Recovery in Housing,” The New York Times (Oct. 6, 2012)