Zacks Analyst Interview Highlights: Beazer, D.R. Horton, Toll Brothers, Ryland and Washington Mutual

CHICAGO--(BUSINESS WIRE)--Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst Rob Plaza, who discusses Beazer (NYSE: BZH), D.R. Horton (NYSE: DHI), Toll Brothers (NYSE: TOL), Ryland (NYSE: RYL) and Washington Mutual (NYSE: WM).

A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Is there any way to parse some good news out of [falling New Home Sales]?

Those looking for a silver lining in this category five hurricane-sized dark cloud might point to the drop in inventories to 495,000 from 502,000 last month and 535,000 a year ago. However, sales are dropping far faster than inventories, leading to a rise of months supply on the market. Currently there are 9.6 months of supply at the current selling rate, up from 9.4 months last month and 6.2 months a year ago.

Even a close look at the raw numbers (as opposed to months supply) does not lend much comfort. New home inventory consists of three parts: not started (basically improved lots), under construction, and completed. While overall inventories are down 7.5% from a year ago, that is made up of a 5.1% drop in not-started homes, a 20.4% decline in houses under construction, but a 12.1% increase in finished home inventories.

Also noteworthy in this report was the sharp fall in prices. The median new home price was $219,200, down 10.4% from a year ago. The average (mean) price was $267,300, down 11.5%. Partially this is a function of sales of McMansions (new homes over $500,000) falling off a cliff, down 66.7% from a year ago. Sales of move-up homes ($200,000 to $499,999) are down 36.1%, while sales of starter houses (under $200,000) are down 36.0% from a year ago.

So please fill me in if you think there are any buying opportunities. Otherwise, where would you advise investors avoid?

The troubles of the housing industry are clearly not over yet and I would continue to advise avoiding (or shorting) home builders like Beazer (NYSE: BZH), D.R. Horton (NYSE: DHI), Toll Brothers (NYSE: TOL) and Ryland (NYSE: RYL). Also avoid firms tied to the mortgage industry such as Washington Mutual (NYSE: WM).

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