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Tickers in this Article: HOV, TOL, LEN, KBH
The public seems confident that the economy isn't going down the drain. As a result, the real estate market could indeed improve from current levels. However, it's hard to call homebuilding stocks a bargain or become seriously interested in the space. (Learn more about investments associated with real estate, see: Exploring Real Estate Investments).

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Not Your Best Bet
Taking an aerial view, the consumer does seem more confident than in the past. But in the near future at least there are still likely to be large quantities of people who fear of job loss, putting out big bucks for a new home and all of the expenses that unfortunately come along with ownership. Even those that do plunk down money on new homes will be reluctant to spend money right away on all of the extras that homebuilders typically offer along with the homes. So while things are looking up, but there are likely to still be some headwinds, which make me reluctant to give homebuilders a serious glance right now.

Hovnanian's Numbers
(NYSE:HOV), which is based in Red Bank, New Jersey, released its second-quarter results earlier in the week. The company posted a loss of 36 cents in the period, which was significantly better than the 64 cent a share loss the Street had been figuring on. Another highlight was that its contract cancellation rate dipped to 17%, whereas it was 24% in the same period last year. That is at least an improvement.

But what about the future? In the northeast, where the company is very popular, there are a slew of existing homes for sale and new homebuilders are still very competitive on pricing as one might imagine. It's tough to believe that this company can really earn on the bottom line over the next few years.

Others No More Appealing
Looking at Toll Brothers (NYSE:TOL), KBHome (NYSE:KBH) or Lennar (NYSE:LEN) isn't much more impressive. Toll Brothers, a high-end builder, is expected to turn in a loss of 70 cents a share this year and it trades for nearly $21. KB Home is expected to lose 89 cents this year and it trades for over $14. Lennar is expected to earn a whopping eight cents this year and trades at more than $16. It would be nice to see larger earnings around the corner and a brighter macro view before picking any sort of entry point.

The Bottom Line
At some point, home building stocks will probably be a great deal, but right now I'd rather investigate other sectors. Given the earnings expectations of some of these stocks, and the potential for larger tax burdens and maybe an interest rate boost at a point, there are likely better opportunities in stocks elsewhere.

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