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The Housing Recovery Continues

Daniel James
February 5, 2014

Following the spectacular growth recorded by homebuilders during the heights of the housing recovery, figures indicating  slowdown may lead one to think that the recovery is over. Indeed, some commentators have claimed that this is the case. However, what we're seeing now seems more like a process of normalization as the market returns to a more sustainable rate of growth. D.R. Horton (NYSE: DHI), for example, just posted an excellent quarterly report, as did builders M/I Homes (NYSE: MHO) and NVR (NYSE: NVR).

Demand remains solid
If D.R. Horton's first-quarter report is anything to go by, it would seem as if the end of housing recovery in America is still a ways off. Quarterly EPS of $0.36 easily beat the $0.29 consensus estimate, with net income up a whopping 86% to $123.3 million. The company's other key metrics were also impressive. The value of net sales orders increased by 14% to $1.5 billion, and the number of homes closed was up by 33% in value.

Clearly, management was pleased with the company's performance to kick off fiscal 2014. They stated that housing market conditions are seeing continued improvement across most of the company's operating areas. Additionally, management saw the weekly sales pace increase in January, commenting that the company is well positioned to take advantage of the spring selling rush.

In general, the housing market seems to be holding up well. Buyers are adjusting to the higher rates that had housing analysts worried not too long ago. As a result, D.R. Horton has been able t