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5 Reasons We're in a New Housing Bubble

By Rick Munarriz - Apr 24, 2013 at 5:49PM

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The signs of froth in the real estate market are there for all to see.

NVR (NVR 2.71%) reported disappointing quarterly results on Monday. The historically conservative homebuilder posted revenue and earnings growth that fell short of Wall Street expectations. The shares recovered most of Monday's losses, but the Virginia-based developer still closed 2% lower on the day.

This is going to be a busy week for homebuilders. Pulte (PHM 1.58%) and D.R. Horton (DHI 2.63%) will join NVR in reporting later this week. Analysts see strong growth at both companies, but investors shouldn't be surprised if Pulte and D.R. Horton also fall short. 

The housing market may be booming right now, but buyers are starting to get cold feet judging by a surprising year-over-year spike in the cancellation rate of new orders at NVR. 

The increase in folks backing out of their contracts is just one of the five signs that longtime Fool contributor sees in arguing that we're in a housing bubble in this video. Agree? Disagree? Check out the video, and then post your thoughts in the comment box below.

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Stocks Mentioned

NVR, Inc. Stock Quote
NVR, Inc.
$4,467.76 (2.71%) $117.74
PulteGroup, Inc. Stock Quote
PulteGroup, Inc.
$45.69 (1.58%) $0.71
D.R. Horton, Inc. Stock Quote
D.R. Horton, Inc.
$74.78 (2.63%) $1.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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