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Takeaway: Defensive positioning within homebuilders has paid off in 3Q. DHI and NVR are the only two builders with positive MTD performance.

Our FMHQ (Friday Morning Housing Quant) tables present the state of the publicly traded homebuilders in a visually-friendly, quantitative format that takes about 60 seconds to consume. 

Quick Quant Takeaways: 

  • Performance Roundup: Housing continues to outperform the market YTD as XHB (+6.0%), ITB (+6.8%) and S5HOME (+10.6%) are running +9-14% ahead of the S&P 500 (-3.5%). The Best builders YTD are DHI (+19.9%), NVR (+18.4%) and MTH (+15.6%), while the laggards are HOV (-58.1%) and BZH (-14.7%). Interestingly, in spite of a rough August all around, the strongest MTD performances have also come from DHI (+2.1%) and NVR (+1.3%), while HOV and BZH have led decliners (-14.4% and -13.9%, respectively).
  • Insider Buying (Within Last 6mos): PHM (2), NVR (1) and KBH (1). That said, there's been no insider buying in the sector since April.
  • Estimate Revisions: NTM earnings estimates in the last 3mos have been revised higher for NVR (+10.3%), DHI (+7.3%) and LEN (+4.7%). At the other side of the spectrum, NTM earnings estimates are down for HOV (-39%) and BZH (-5.6%). NTM revenue, meanwhile, saw the biggest positive revisions at KBH (+4.9%), LEN (+4.8% and DHI (+1.6%), while the biggest declines were at MDC (-4.6%) and HOV (-3.0%).
  • Housing Macro | ↑Income Growth:  This morning’s Household Income and Spending figures for July showed aggregate Disposable and Salary & Wage Income growth accelerating on MoM/YoY/2Y Ave basis.  The trend in the aggregate household P&L continues to be one of improvement as solid monthly labor market gains and positive mix in hiring have continued to drive rising income growth.   While the rising savings rate has muted the translation to actual consumption growth, it’s hard to characterize rising incomes and rising savings as fundamentally negative developments and, for housing, that duality remains supportive of rising headship rates and housing consumption broadly (see last table below).  

FMHQ (Friday Morning Housing Quant) - HB Quant 1 with edits

FMHQ (Friday Morning Housing Quant) - HB Quant 2

FMHQ (Friday Morning Housing Quant) - HB Quant 3 with edits

FMHQ (Friday Morning Housing Quant) - Compendium 082715

FMHQ (Friday Morning Housing Quant) - U.S. Eco Summary Table

FMHQ (Friday Morning Housing Quant) - HH Income   Spending Summary Table 

Joshua Steiner, CFA

Christian B. Drake