As September New Home Sales Jump, We’re Watching Support Levels for This Holding
The final figure was even better than we thought, but we have our eye on the rebound in mortgage rates.
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Sales of new single-family homes in the United States jumped 4.1% to a seasonally adjusted annual rate of 738,000 in September, the highest level since May 2023 and above the 720,000 consensus. Following September mortgage data, we suspected we could see an upside print compared to August’s 709,000 figure, but the final figure was even better than we thought.
Adding the September figure to those for July and August shows a noticeable uptick in Q3 2024 home sales compared to Q2 2024. This of course supports the comments for stronger H2 2024 home deliveries compared to H1 2024 from the likes of Lennar LEN, KB Home KBH, and more recently PulteGroup PHM.
These collected findings bode well for upcoming earnings from Builders FirstSource BLDR, but the rebound in Treasury yields has dragged 30-year mortgage rates higher as well. That could temper guidance from Builder even as homebuilders continue to adopt its value-added products to bolster their own margins.
Recognizing this, we are on the sidelines for now and we would be happy to pick up more BLDR shares on further share price weakness knowing the Fed’s goal to eventually return monetary policy to a neutral setting. As that unfolds, more favorable mortgage rates should invigorate the housing market, a positive for Builders as well as our other construction-related holdings.
When it comes to BLDR shares, one area we are watching closely is the 200-day moving average that clocks in near $175. If the shares break that level of support the next one to watch is the 100-day moving average near $167.
At the time of publication, TheStreet Pro Portfolio was long BLDR.
