November Saw Pending Home Sales Plummeting (PHM, KBH, TOL, XHB, LEN)

Pending home sales fell by 16% during November, 2009. This fall was mainly due to the expiry of the tax credit for new homeowners.

According to the National Association of Realtors, the tax was to expire on November 30th. However, the tax credit scheme was extended until April, 2010. Now this scheme is applicable to repeat home-buyers too.

The pending home sales index was higher by 15.5% on the YoY basis. This index measures the number of contracts signed but not closed on previously owned houses. According to Lawrence Yun, chief economist for the related lobbying group, "The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own".

This development has led to an increase in housing stocks as well. Pulte Homes, Inc. (NYSE: PHM) increased by 4.99%, whereas KB Home (NYSE: KBH) increased by 7.98%. Toll Brothers, Inc. (NYSE: TOL) recorded an increase of 4.57%. Among the other gainers were Lennar Corporation (NYSE: LEN) and D.R. Horton, Inc. (NYSE: DHI).

The related ETF also gained traction due to the positive news. SPDR S&P Homebuilders (ETF) (NYSE: XHB) recorded an increase for the second day in a row. SPDR S&P Homebuilders has gained 2.58% so far on a volume of $3.08M. PowerShares Dynamic Bldg. & Const. (ETF) (NYSE: PKB) has gained by 0.75% and is likely to continue the upward streak.