U.S. homebuilders rose the most in two years after an index of developer sentiment unexpectedly increased to its highest level since May 2010, spurring optimism that demand for new houses may be improving.
The Standard & Poor’s Supercomposite Homebuilding Index climbed 7.2 percent as of 1:17 p.m. in New York trading, and earlier gained as much as 8.5 percent, the biggest intraday increase since May 2009. Toll Brothers Inc., the largest U.S. luxury-home builder, and Meritage Homes Corp. rose the most among the gauge’s 12 members.
The National Association of Home Builders/Wells Fargo sentiment index climbed to 18 from 14 a month earlier, data from the Washington-based group showed today. Economists surveyed by Bloomberg News projected the measure would rise to 15, according to the median forecast of 47 economists. Readings below 50 mean more respondents said conditions were poor.
Homebuilder shares “started to rally off of the better sentiment number, then continued to rally from there,” Megan McGrath, an analyst with MKM Partners LP in Stamford, Connecticut, said in an e-mail. “It’s also possible investors are setting up for earnings season and other homebuilder data to come later this week, which now people think may not be as bad as feared.”
The Commerce Department reports September housing starts tomorrow. The National Association of Realtors releases existing home sales data for September on Oct. 20.
The S&P homebuilder measure is down 21 percent this year, compared with a 3.9 percent decline for the S&P 500 index.
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