Fed Opens the Door for Homebuilders

Select home construction companies should thrive as the Fed's easing keeps mortgage rates lower

By Michael Jaffe

The weak stock market and sluggish economy have brought concerns about housing prospects, but sector variables now are more positive. The Fed's seemingly ongoing rate-easing program should firm the economy and boost consumer confidence. Mortgage rates also are buyer-friendly.

Standard & Poor's is upgrading the top sector choice, Lennar (LEN ) to buy from accumulate. S&P favors Lennar because it's in one of the leading positions in the nation's top demographic markets and has used differing marketing strategies since its May 2000 purchase of U.S. Home.

S&P reiterates accumulate on Toll Brothers (TOL ) and KB Home (KBH ).

Jaffe follows homebuilding stocks for Standard & Poor's

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