US Homebuilders continue to outperform

The National Association of Home Builders (NAHB) Market Index for October came in at 64 - above the 62 consenus estimate and the highest reported number in a decade... This confidence indicator reinforces our positive stance on the sector which we have been highlighting all year... On top of the strong double digit volume growth, pricing is also starting to improve - boosting sales and margins.... We remain of the view that borrowing costs will remain accommodative - the chart highlights the importance of this as a driver of future activity...Expect housing starts and permits activity to continue to show strong yoy improvement across the remainder of this year... furthermore, the pace of housing activity has not met the level of new household formations - a key point in our view...As an industry homebuilders have been a strong outperformer against the S&P benchmark this year - we see scope for this to continue... This week NVR and PulteGroup report... expect to see positive financial performance along with reassuring confidence as regards the demand environment.


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