Shares of major homebuilders rose Thursday as Congress nears a deal on a rescue package that could help a half million struggling homeowners receive government-backed mortgages.
However, a Deutsche Bank analyst believes government invention won't significantly alter the housing downturn.
On Thursday, Sen. Christopher J. Dodd, D-Conn., chairman of the Senate banking committee, postponed a meeting to vote on the rescue plan in anticipation of reaching a compromise with Sen. Richard C. Shelby of Alabama, the panel's senior Republican.
Yet, in a client note, analyst Nishu Sood said so far, government efforts have yet to change the trajectory of the housing slump and future proposals will likely fare the same.
The analyst expects housing conditions to deteriorate throughout the year.
"We think investors may be baking in too high a probability of (second half of 2008) housing recovery. Builders have mostly righted their own ships, but as resale market correction continues, there is little to do but wait," Sood wrote.
Housing shares rose along with the broader market as Federal Reserve Chairman Ben Bernanke said in a speech in Chicago that he is encouraged by efforts by banks to raise cash, and several economic reports indicated the economy is hurting, but not as badly as some feared.
Pulte Homes Inc.'s stock rose 56 cents, or 4.1 percent, to $14.33 in afternoon trading. KB Home added $1.09, or 4.5 percent, to $25.55, while Centex Corp. climbed 77 cents, or 3.5 percent, to $22.86. D.R. Horton Inc. gained 27 cents to $15.55.
Luxury builder Toll Brothers Inc. advanced 97 cents, or 4.1 percent, to $24.71.
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