Homebuilders may see business bloom again this spring, according to Credit Suisse, which upgraded KB Home on Wednesday.
Shares of KB Home, as well as Ryland, Meritage and Standard Pacific hit yearly or multi-year highs Wednesday. Five others hit new highs Tuesday.
Analyst Daniel Oppenheim said that there appears to be strong demand and pricing in place ahead of the spring-buying season. His firm's survey of real estate agents in January points toward more buyers and improved prices, with increases in nearly all markets.
The biggest surprise, he said, is that home price appreciation could be even greater than expected. It is now more affordable in terms of the median mortgage payment relative to the median household income, and relative to rent levels, than at any other time in several decades, Oppenheim said.
The analyst expects orders for new homes to rise 26 percent in 2013 and 21 percent in 2014.
Oppenheim upgraded his rating on KB Homes to "Outperform" from "Neutral" as it expects its order and margins to grow. The company's shares increased 31 cents to $18.93 by late afternoon after hitting a multi-year high of $19.57 earlier in the day. Its shares have traded between $6.46 and $18.99 during the past 52-weeks.
Oppenheim downgraded Lennar Corp. shares to "Neutral", but only because its shares have risen almost 90 percent in the past year and he believes there is little more room to run. Shares fell $1.11, about 2.6 percent, to $41.53. Its stock value has increased nearly 90 percent since this time last year.
The analyst also raised his estimates and target prices for a number of builders.
Here's a look at how a number of other homebuilders performed by late afternoon Wednesday, all of which have hit 52-week highs this month:
Toll Brothers Inc.: Fell 46 cents to $37.32 but are up roughly 68 percent since January of 2011
Hovnanian Enterprises Inc.: Fell 26 cents, more than 4 percent, to $5.91 as a 7-month rally appears to be slowing.
PulteGroup Inc.: Fell 9 cents to $21.02, in line with broader market trends but still at the high end of its 52-week trading range
MDC Holdings Inc.: Fell 41 cents to $41.28 but have climbed steadily throughout the year. Its shares have traded between $19.73 and $42.41 in the past 52-weeks.