Prices of homebuilders’ shares dropped after California-based real estate research firm RealtyTrac released its foreclosure home numbers for the month of May 2009.
In May, foreclosure filings for homes nationwide increased by 18 percent compared to May 2008, pushing the total number of filings to 321,480, including 65,017 foreclosure home units.
The total number of loan delinquencies and scheduled foreclosed home auctions declined compared to April, but the number of bank owned foreclosure homes increased by two percent. Real estate owned units increased in Michigan, Washington, Arizona, Oregon, Nevada and New York.
After the release of RealtyTrac’s foreclosure home data, the share price of Michigan homebuilder Pulte Homes fell to $8.93, a drop of 5.1 percent while the share price of Dallas builder Centex Corp. declined to $8.59, a drop of 4.7 percent. Miami builder Lennar Corp.’s share price fell to $8.25, a decline of 4.7 percent.
The share prices of homebuilders Toll Brothers, KB Home, M/I Homes and MDC Holdings also declined.
David Urani, a Wall Street Strategies analyst, said the foreclosure data affected investors negatively because the total foreclosure filings surpassed the 300,000 level for the third straight month, a first time occurrence in the history of RealtyTrac, according to the research firm’s chief executive James J. Saccacio.
Urani observed that even if the total foreclosure filings dropped by 6 percent compared to April, the total number of 321,480 is still a significant number.
He also added that the rise in mortgage rates and the continued rise in the joblessness rate, especially in states such as Michigan and New York, could hinder recovery efforts.
The joblessness rate increased to 9.4 percent in May, the highest level in 25 years, according to the Labor Department, and is expected to surpass the 10 percent level in the coming months.
The number of mortgage applications declined in recent weeks, according to data from the Mortgage Bankers Association. The pace of loan refinancing and mortgage application has declined by 7.2 percent on an adjusted basis last week.
Investors know that the thousands of foreclosure home units that will be added to the market will further overload foreclosed home inventories and push home prices down.
There are increases in home sales in many areas of the country because of low foreclosure home prices, but the expected addition of more foreclosure properties into the housing market have caused investors to think twice about home builder stocks.
back to top
Comments on this entry are closed.