New-Home Sales Unexpectedly Fall, But These 3 Builders Are Near Buys

New-home sales unexpectedly fell in August while supply surged as hurricanes take their toll on normal sales activity in Texas and much of the South. But shares of most homebuilders rallied Tuesday morning, with D.R. Horton (DHI), Toll Bros. (TOL) and LGI Homes (LGIH) all close to buy points.

Sales of single-family new-home sales fell 3.4% to an annual rate of 560,000, after July was revised up slightly to a 580,000 pace, the Commerce Department said. Economists had expected a rise to 583,000. The supply of homes at the current sales pace rose to 6.1 months, the highest since July 2014. Some 284,000 new homes were on the block, the most since May 2009, at the tail end of the last recession. Sales fell 4.7% in the South.

The storms and the aftermath will likely affect sales and construction for several months.

D.R. Horton rose 1% to 37.44 in the stock market today, after reaching 37.61 intraday and briefly topping a 37.54 buy point. D.R. Horton cleared that entry earlier this month but pulled back, finding support just above its 50-day moving average. D.R. Horton lowered guidance on Monday due to the recent hurricanes.


Toll Bros. advanced 1 cent to 40.22. Shares of the entry-luxury builder are closing in on a 41.17 buy point.

LGI Homes advanced 1.1% to 46.07. As of Tuesday's close, LGI Homes has a proper handle with the minimum five days. That gives the stock a lower entry of 46.99.

Meanwhile, Home Depot (HD), which has gotten a lift from prehurricane preparations and post-hurricane repair, edged up 0.1% to 161.26. Home Depot nudged past a 160.96 entry on Monday, but in light volume.

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