Why Homebuilders’ Stocks Jumped

What: Shares of homebuilders have jumped today on bullish news from the housing sector. Hovnanian Enterprises (NYSE: HOV  ) is leading the charge by jumping 10%, but Beazer Homes (NYSE: BZH  ) , KB Home (NYSE: KBH  ) , and PulteGroup (NYSE: PHM  ) are also moving higher today.

So what: The Commerce Department said that housing starts jumped 15% from August to September to a seasonally adjusted rate of 872,000, the highest level in four years. That's a jump of 34.8% from the pace of a year ago, one more sign that the housing market is back in business.  

Now what: Homebuilders have been in the dumps since the start of the recession but this is another data point showing consistent growth in the industry. There's still about a 50% upside for homebuilders given the rate of household formation in the U.S. of 1.2 million. The leaner builders will be able to cash in on growing demand and should lead to higher results in the next few years. I think now is a great time to be a buyer of some of these down and out homebuilders.

Interested in more info on Hovnanian Enterprises? Add it to your watchlist by clicking here.

 

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw

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