Prices can’t rise fast enough for builders

The National Association of Home Builders reported its housing-market index showed optimism among builders reached its highest level this month since October of 2005. The Commerce Department’s report on building activity showed construction was started on 740,000 single-family homes in September, up from 661,000 a year earlier.

Contributing to the high level of optimism is survivorship bias: There aren’t as many firms in business now as there were during the bubble. With homes fetching high prices and costs contained, it’s no wonder spirits are running high. In the twelve months leading up to August, the median price for a new home averaged $290,000 across the US, 35% higher than the average median price for an existing home over the same period.

Home building stocks have been doing well this year, handily outperforming the broader market.


Justin Lahart & The Wall Street Journal

Post created by: Pamela Biggs