New home sales also fell in November from a sharply higher October reading of 474,000 to the initial reading of 464,000 in November. The further downward revision to the November reading makes the December number look even weaker.
For the full year, new home sales rose to an estimated 428,000, up 16.4% from the total of 368,800 in 2012.
The Census Bureau also reported that the median sales price for new homes sold in December was $270,200 and the average sales price was $311,400. At the end of December the number of new homes for sale totaled 171,000, a supply of 5 months at the current sales rate.
Homebuilder stocks had an uneven 2013, with stock prices peaking in May and trending downward for most of the rest of the year until the November new home sales report boosted shares again.
Of five stocks we looked at, only one shows a gain over the past 12 months. Meritage Homes Corp. (NYSE: MTH) has a market cap of $1.68 billion and the stock closed at $45.39 last Friday, in a 52-week range of $38.42 to $52.95. The stock is up more than 8% over the past 12 months. The consensus price target is around $50.10, which indicates an implied gain of about 10%, about half the implied gain we saw in December. Meritage has easily beaten EPS in each of the past four quarters. Shares were up nearly about 0.8% at $45.82 on Monday morning. Meritage reports earnings on February 5 and is expected to post EPS of $1.03 on revenues of $537.3 million.
D.R. Horton Inc. (NYSE: DHI) trades in a 52-week range of $17.52 to $27.75, and closed at $20.88 on Friday. The company’s market cap is $6.72 billion, and the share price is down about 3% in the past 12 months. The consensus price target on the stock is around $23.50, implying a potential gain of 12.4%. Horton has met or exceeded EPS estimates in each of the past four quarters. Shares were trading down about 0.6% Monday morning at $20.75. The company is expected to post EPS of $0.29 on revenues of $1.45 billion when it reports results Tuesday.
Tri Pointe Homes Inc. (NYSE: TPH) has a market cap of $564.3 million and the stock is down about 5% over the past 12 months. Shares have traded in a 52-week range of $13.43 to $21.25 and closed Friday at $17.51. The consensus price target is $19.60, yielding an implied gain of 12%. Tri Pointe has beaten EPS estimates in each of the past four quarters, and the shares were trading nearly 2% higher early Monday morning. Tri Pointe is expected to post EPS of $0.25 on revenues of $100.04 million when it reports results in late March.
The sharp increase in new home sales during 2013 is not likely to be duplicated in 2014. Interest rates, though still historically low, are more than 1% higher than they were a year ago, and that is cooling buyer interest. Inventories are also growing and that could help moderate prices, but whether that will be enough to spur more buyers is not clear.
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