4 Construction Stocks Poised For A Q3 Earnings Beat

The positive momentum witnessed in the U.S. construction sector at the beginning of 2017 is looking somewhat shabby now. Tepid housing sales data owing to inventory shortage along with two devastating hurricanes (Harvey & Irma) has been causing damage to the industry’s sales pace in recent times.

The recent data reflects weakening sales figure with existing home sales (which make up a larger part of all the U.S. real estate activity) which fell to a one-year low in August (down 1.7%), per the latest report by National Association of Realtors (NAR). This marked the fourth decline in five months, bringing down the annual rate to the lowest level in 12 months. Housing starts dropped 0.8% sequentially in August. In July, existing home sales slipped 1.3% from the previous quarter, while housing starts dropped 4.8% sequentially.

August new-home sales ran at a seasonally adjusted annual pace of 560,000, per the latest report from the Commerce Department — the lowest annual rate since December 2016. This was 3.4% lower than the month ago and 1.2% lower than the August 2016 level.

Even housing starts, permits, and completions dropped 4.8%, 4.1% and 6.2%, respectively, in July. New U.S. single-family home sales also unexpectedly fell 9.4% in July, the lowest level since December 2016.

Adding to the woes is the homebuilders’ confidence index that dipped 3 points in September from August. NAR also has cut its 2017 forecast for existing-home sales owing to a tepid spring selling season and the impact of hurricanes. The group now expects the sale of 5.44 million homes in 2017, down 0.2% from 5.45 million in 2016 and well below 5.52 million expected earlier.

Yet, the overall vision of the market remains positive. The housing market is expected to gradually recover throughout the rest of the year, banking on solid ongoing job market and economic growth. Again, re-building efforts and lost activity are expected to show up in 2018. As the hurricane-ravaged communities are rebuilt, activity could pick up, making way for higher demand later this year and into the next.