Homebuilders Are Feeling Better, Which Is Great News

If there's one thing that could get the economy back up and humming, it's home construction. That's why today's news about rising confidence among homebuilders should be greeted enthusiastically.

The National Association of Home Builders reported this morning that its housing market index, which tracks confidence among homebuilders, rose by six points to 57 in July. It was the index's third consecutive monthly gain and the strongest since the beginning of 2006.

The association's chairman Rick Judson noted that, "Today's report is particularly encouraging in that it shows improvement in builder confidence across every region as well as solid gains in current sales conditions, traffic of prospective buyers and sales expectations for the next six months."

The rising confidence is consistent with at least two related trends. At the end of last week, both JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) announced that their purchase-money mortgage originations shot up by 44% and 46%, respectively, over the first quarter.

In addition, homebuilders themselves are starting to report dramatically improved quarterly results. Most recently, Toll Brothers (NYSE: TOL  ) said that its unit deliveries in the second quarter were up by 33% while Lennar's (NYSE: LEN  ) were higher by 39%.

The significance of this industry for the overall economy cannot be overstated. It's estimated that two to three jobs are created with every home built. As a result, it's axiomatic that there's never been a strong economy without a strong housing market.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2539719, ~/Articles/ArticleHandler.aspx, 10/1/2016 6:21:32 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 21 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:03 PM
JPM $66.59 Up +0.94 +1.43%
JPMorgan Chase CAPS Rating: ****
LEN $42.34 Up +0.15 +0.36%
Lennar CAPS Rating: **
TOL $29.86 Up +0.30 +1.01%
Toll Brothers CAPS Rating: ***
WFC $44.28 Down -0.09 -0.20%
Wells Fargo CAPS Rating: ****