Tags: Homebuilders | inventory | Shadow | US

Homebuilders May Escape U.S. Inventory Shadow

Wednesday, 07 March 2012 12:05 PM

A decline in the number of U.S. homes that may have to be sold is “undeniably providing support for a nascent recovery” in housing, according to Robert C. Wetenhall Jr., an analyst at RBC Capital Markets LLC.

In last year’s fourth quarter, so-called shadow inventory amounted to 5.13 million. The figure was the lowest in three years and 18 percent below its peak, reached in the third quarter of 2009.

“The trend positions the housing market to benefit from tighter supply levels in the future,” Wetenhall wrote Tuesday in a report that examined U.S. homebuilders’ outlook for their spring selling season.

Builders will start working on 700,000 new homes this year, according to Wetenhall, who increased his estimate by 50,000. The New York-based analyst’s current projection almost matches January’s annual rate of 699,000 starts, as compiled by the Commerce Department.

KB Home and Lennar Corp. are his top stock picks in the industry. Both builders have outperform’ ratings, which means they are poised to beat their peers during the next 12 months. D.R. Horton Inc., PulteGroup Inc. and Toll Brothers Inc. are rated sector perform.

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Wednesday, 07 March 2012 12:05 PM
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