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Homebuilder Stock Plays

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  • Description

    MKM Partners executive director Megan McGrath gives tips for investing in the homebuilder sector.

  • Duration 3:04
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Well new housing data showing a housing recovery could be taking hold new home sales coming out today up three point 6% for the month of July housing stocks.

Could be up by.

But some you may want to sell mega McGrath executive director and senior analyst and can partners joins me now somebody took their red pen out against one of the -- to -- today.

You downgraded totals I have to admit I -- them from a buy to neutral looks evaluation call today -- fact had a really nice kind of 66%.

Year to date.

I was it or not a -- to complain about but it's the most expensive stock in our universe right now.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- You think.

The same thing that everyone else is concerned about if consumer confidence starts to go down this is an impact -- house it's a really emotional purchase for folks -- we have to be worried about things like the fiscal -- And what's going on the government because people need to feel comfortable -- their job and comfortable.

In their outlook for the economy in order to buy homes in the upcoming election factor and your thinking as a stock analyst thank you so you mean going into election we're gonna hear a lot in the debates we're gonna hear a lot about platforms and people are gonna think about how -- is an aspect of life their job.

Their ability to make big purchasing decisions this is the biggest purchase you might may -- a consumer -- your entire life tax -- -- into camp.

That's becoming Jimmy Megan -- because the fact that you're gonna have interest rates staying around that 4% level we know that thanks to it to Ben Bernanke really quick.

A couple of stock -- that I wanna get to from you because you said you -- downgraded told but you still like DR Horton in east LA KB homes and you wanna get those.

Shots our viewers because you know it may be looking to buy up big -- yeah yeah we like them both of those stocks OK and and and -- -- the stock is up a 100% but you're not.

Downgrading that -- We're not coming -- until they think they have a little -- in June and September is their fiscal year to that tense do you really good quarter for them okay the overall summer -- finally go you know but what we have seen is not the builder confidence has been rising.

We've obviously new home starts have been rising existing home sales in the world a better but prices.

Where are we with prices overall.

-- -- The -- that are getting a little bit of pricing power told said yesterday in a conference -- fifty to 60% of their communities that's starting to raise prices but even they are cautious based that actually is we're scared we're scared to raise prices they don't want to scare the consumer off.

We're also seeing an issue with appraisals that -- -- the -- the other way.

And appraisers are now not approving price increases that are very significant -- the builders are happy to do it very small increments 509000.

Dollars.

So I would be scared the prices are gonna pricey -- it's still a pretty good time to buying -- but if you're thinking about an investment.

I wouldn't use significant price increases as part of that -- the.

Mortgage deduction issue is going to be coming up front -- -- with the GOP and the DNC coming up for the conventions Megan -- thank you very much it's great to have you on the show and -- -- I Dennis D'Andrea.

Retailing.

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