Homebuilders

2014

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The homebuilding industry is recovering from a five year deep recession spawned by the near collapse of the financial system in the United States. The recent end of the government asset purchase program, known as QE3, signals a recovering economy including strong projections for the housing industry. Analysis will be presented indicating the housing industries reliance on exogenous policy, such as interest rates, labor, and general economic growth to maintain current growth projections. The report will present financial statement analysis on the three largest public homebuilders, D. R. Horton, Lennar, and Pulte. Selected financial data has been abstracted from reported financial statements and presented for balance sheet and income statement ratio analysis. The report also contains relevant information detailing the DuPont analysis, Beta analysis for three different exchanges, and Weighted Average Cost of Capital (WACC). Additional analysis will be presented indicating the relationship of the housing market to interest rate direction using regression analysis. The close relationship of interest rates, an indicator of mortgage rates, is a key component for continued growth in the homebuilding industry.

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