Homebuilders rally as drop in mortgage rates spurs demand
AP Photo/Donna McWilliam
- Homebuilders rallied Wednesday after Mortgage Bankers Association data showed mortgage rates fell unexpectedly last week.
- Homebuilders KB Home and Lennar reported first quarter results between Tuesday's closing bell and Wednesday's open.
- Watch KB Home and Lennar trade live.
The homebuilders were rallying after Wednesday after data showed last week's drop in mortgage rates propped up mortgage applications. Adding to the strength were quarterly reports from two of the nation's largest builders that forecast new-home orders ahead of expectations.Applications for mortgages surged 8.9% last week following an "unexpected drop" in rates, according to Mortgage Bankers Association data released Wednesday. Advertisement
"The spring buying season is off to a strong start," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Thanks to an unexpectedly large drop in mortgage rates following last week's FOMC meeting, purchase applications jumped 6 percent and refinance applications surged over 12 percent.
He added that rates on all types of loans, including the 30-year fixed-rate mortgage, were now more than 70 basis points off their November peak and that the average loan size had "increased once again to new highs for both purchase and refinance loans."On top of that, both Lennar and KB Home gave outlooks that exceeded expectations.
Lennar, the largest US homebuilder, reported first-quarter results Wednesday that missed on both the top and bottom lines, but forecast new order growth that was 5% above the high end of its guidance.And in its report out Tuesday evening, KB Home reported mixed results, and said that opening 35 new communities in the second quarter would help it capture pent up demand. Here's a look at the scoreboard as of 2:32 p.m. ET:Advertisement