The Ryland Group, Inc. (RYL), D.R. Horton, Inc. (DHI): Housing Market Gains Cause Homebuilder Losses

Lennar Corporation (NYSE:LEN) was impacted not only by the housing market crash, but also by a 2011 stock fraud scam that caused the company’s stock to drop 26%. The perpetrator of this scam, Barry Minkow, is now in jail. Nonetheless, Lennar Corporation (NYSE:LEN) has recovered just in time to enjoy the upswing in the housing market.

With expected 189% earnings growth in 2013 and a 59% increase in orders this past April, The Ryland Group, Inc. (NYSE:RYL) is definitely a stock to watch. The homebuilder recently received a boost from Goldman Sachs Group Inc (NYSE:GS), which assumed coverage of the stock and gave the company a Buy rating, citing its heavy presence in multiple markets and its appeal to high-end buyers.

The Ryland Group, Inc. (NYSE:RYL) has a 50-day moving average of $45.35 per share, with revenue of $374.70 million in its most recent quarter. This was up 73.6% on a year-over-year basis. But like D.R. Horton, The Ryland Group, Inc. (NYSE:RYL) stock has been negatively impacted by rising mortgage rates. Shares dipped slightly as investors grew concerned about the company’s future.

Homebuilders look promising

Both D.R. Horton, Inc. (NYSE:DHI) and The Ryland Group, Inc. (NYSE:RYL) quickly rebounded, however, returning to earlier highs. Nonetheless, analysts will continue to watch all three stocks in the coming months, especially if mortgage rates increase.

As the economy continues to improve, however, consumer interest in homebuying is certain to increase, as well. D.R. Horton, The Ryland Group, Inc. (NYSE:RYL), and Lennar Corporation (NYSE:LEN) are all very likely to benefit from increased interest in new home ownership in the next couple of years as current homeowners and renters start shopping for homes.

The article Housing Market Gains Cause Homebuilder Losses originally appeared on Fool.com and is written by Stephanie Faris.

Stephanie Faris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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