It appears we may have reached a bottom in housing.  A few factors remain such as a reduction of inventory and continuing foreclosures. BUT... Nevertheless we are getting very close to seeing a continuing fall in pricing!

Chris!

 

 

U.S. Homebuilder Index Set for Best Week Since Inception

By Brian Louis

Jan. 25 (Bloomberg) -- U.S. homebuilder shares are poised for their biggest weekly gain since 1995, as investors and analysts say the market for new homes may have hit bottom.

Standard Pacific Corp. and Lennar Corp. led a Standard & Poor's measure of U.S. homebuilders up as much as 8.6 percent today, after rising 25 percent this week through yesterday.

Homebuilding shares rose for the seventh consecutive trading day after analysts at Pali Research and Raymond James & Associates raised their ratings on some companies, amid expectations that U.S. government action, including the Federal Reserve's interest rate cut this week, will boost demand for housing.

``We will say right up front that, just like with the rest of the industry, the sun is not shining very brightly, but at least the worst of the storm has likely passed,'' Stephen East, an analyst at Pali Research, wrote today in his report on Lennar.

Lennar, which reported the biggest quarterly loss in its history yesterday, gained as much as 21 percent after Pali raised its rating on the shares to ``neutral'' from ``sell'' as the Miami-based builder reduced inventory and generated cash flow.

The builder index rose in the holiday-shortened week 25 percent through yesterday, topping the previous one-week record of 16 percent set in April 1999. U.S. stock markets were closed Monday for the Martin Luther King Jr. holiday.

The Fed on Jan. 22 cut its target overnight lending rate to 3.5 percent from 4.25 percent. The reduction increased optimism mortgage rates will fall and help more people buy homes.

Jumbo Limit

U.S. lawmakers are poised to approve measures that may boost demand for housing. An accord reached in Washington would temporarily allow federally chartered mortgage-finance companies Fannie Mae and Freddie Mac to buy mortgages of up to $729,750, well above the $417,000 limit.

Lennar rose $1.72, or 11 percent, to $17.93 at 9:59 a.m. in New York Stock Exchange composite trading. The builder, founded in 1954, reported yesterday a fiscal fourth-quarter net loss of $1.25 billion, or $7.92 a share, as revenue fell 49 percent to $2.18 billion. The company also recorded $1.86 billion in expenses as the deteriorating housing market forced it write down land and walk away from options on property.

Irvine, California-based Standard Pacific, which sells houses in eight states, rose 38 cents, or 13 percent, to $3.38.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net .