Why Homebuilder Stocks Are Surging

New single-family detached homes at Lennar's Aria at West Creek development in Santa Clarita, Calif. Photograph by Damian Dovarganes

Look around: There remains no shortage of foreclosures and banks struggling under the weight of bad mortgages. The U.S. homeownership rate has regressed back to 1996 levels. Housing prices have fallen a third from their bubble highs.

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