Pheonix & Atlanta to See Surging New Home Sales, Barclays Capital

15 August 2011

We live in a very different world to that of the boom. I have just read a report in Bloomberg in which Barclays Capital have laid out why Phoenix and Atlanta are to be the two best markets in the US for the sale of newly built homes, giving details of which builders are set to benefit most from the upturns in sales.


During the boom one would have had to search had to find such tips, now they are in mainstream news. This is almost certainly because of the dent in popularity stocks and shares investments have taken.


According to the report Phoenix leads 16 metro areas examined for potential revenue with $4.45 billion in new home sales. It is followed by Washington with $3.94 billion and San Diego with $3.31 billion. However in terms of sale numbers the report said that Atlanta has the potential for 47,317 new houses a year, followed by Phoenix with 46,485 and Dallas with 33,997.


However, all these sales are only to come when the distressed inventory has been cleared, which Barclays gives no timeline for. In fact the projections are based on the speed at which the distressed inventory is selling, as well as population growth in the regions.


The report is not aimed at private investors, who are currently buying up the distressed assets in their droves in order to benefit from soaring rental demand and the chance for huge capital growth. Rather it is to say that the stocks of builders ready to supply the demand in these areas are a good bet for a buy now, when their prices are still undervalued.


According to the report Meritage Homes Corp. (MTH), a Scottsdale, Arizona-based builder, has about 53 percent of its home sales in markets with the best outlook, the most of any company. Meritage is followed by PulteGroup Inc. with 39 percent, D.R. Horton Inc. and MDC Holdings Inc. (MDC) with 32 percent each, and KB Home (KBH) with 31 percent.


"While improved operating performance may take several quarters to materialize, the recent selloff provides a potential entry point for some of the long risk recommendations that follow from our analysis," the Barclays analysts said.

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