LGI Homes files for $125 million IPO as U.S. housing market recovers

n">(Reuters) - Homebuilder LGI Homes Inc filed with U.S. regulators on Wednesday to raise up to $125 million in an initial public offering, at a time when the recovery in the U.S. housing market picks up pace.

LGI Homes started in 2003 and currently builds entry-level homes that are priced between $115,000 and $260,000 in Texas, Arizona, Florida and Georgia.

U.S. homebuilder confidence neared an eight-year high in August as strong demand for and the limited supply of new and existing homes outweighed higher mortgage rates, data from the National Association of Home Builders showed.

LGI Homes' revenue nearly tripled to $143.4 million in 2012 from 2010, the company said in a filing with the U.S. Securities and Exchange Commission. (link.reuters.com/tyt62v)

The Woodlands, Texas-based company said it revenue has grown at a compound annual rate of 61 percent since 2010.

LGI Homes sold 1,062 homes in 2012, almost 2.5 times higher than 2010. It has sold over 5,000 homes since 2003.

The filing did not reveal how many shares of common stock the company planned to sell or their expected price.

The company intends to list its common stock on the Nasdaq under the symbol "LGIH".

It said Deutsche Bank Securities, JMP Securities, JP Morgan, Barclays, Bank of America Merrill Lynch and Builder Advisor Group were underwriting the IPO.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

(Reporting By Varun Aggarwal in Bangalore; Editing by Savio D'Souza)

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Analysis: Spending on cars, homes threatens apparel sales as holidays approach

By Jessica Wohl and Phil Wahba

Mon Aug 26, 2013 7:07am EDT

n">(Reuters) - Even with consumer confidence at a six-year high, retailers ranging from Target Corp (TGT.N) to Macy's Inc (M.N) are competing not only with each other but are also having to adapt to shifting spending patterns.

Many consumers are taking advantage of still-low interest rates, purchasing cars and houses, but at the same time they are holding back on shirts, dresses and shoes, which doesn't bode well for many retailers in the run-up to the year-end holiday season.

"People are putting their money into things that will last," said Jill Puleri, IBM's global industry leader for retail. "If you look at appliances, if you look at jewelry, these are not necessarily small purchases. They're rewarding each other ... They're putting money where things are more stable."

IBM expects U.S. appliance sales to rise 6 percent in the current third quarter, with sales of other home goods up 1.67 percent. For the holiday season, it expects appliance sales to rise 2.13 percent and sales of home goods to rise 1.98 percent, while anticipating the steepest decline, 3.62 percent, in men's apparel.

That's good news for companies such as home improvement chains Home Depot Inc (HD.N) and Lowe's Cos Inc (LOW.N), which reported strong quarterly results and raised their fiscal year forecasts as people spruced up their homes.

In contrast, Macy's, Kohl's Corp (KSS.N), Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and even luxury chains such as Saks Inc (SKS.N) and Nordstrom Inc (JWN.N) posted disappointing second-quarter sales in recent weeks, and many aren't hopeful about the holidays.

"As people are spending more money on their cars and homes, they are cutting back elsewhere, such as their spending on items like clothes and shoes," Sears Holdings Corp (SHLD.O) Chairman and Chief Executive Edward Lampert told Reuters in an interview.

Macy's, which gets about 80 percent of sales from clothing, lowered its sales forecast for the year after it noticed spending shifting away from what department store chains offer.

"The problem now is that there is no fashion, and if there is no newness, clothing becomes a commodity," said Patty Edwards, chief investment officer of Trutina Financial, which sold Nordstrom earlier this year, but owns Michael Kors Holdings Ltd (KORS.N), PVH Corp (PVH.N) and Nike Inc (NKE.N). "Beyond a select few, I'd think twice about getting into apparel and retail stocks."

Some of the biggest hedge funds are shifting out of the sector. An analysis of holdings in the most recent quarter of the top 30 hedge funds by Thomson Reuters shows consumer discretionary stocks suffered the third biggest decline in the period, falling 2.15 percent. Only energy and materials had larger declines, at 5.25 and 11.59, respectively. The research shows that money shifted into healthcare, telecoms and technology stocks.

POTENTIALLY WEAK HOLIDAY SALES

While interest rates have risen sharply in the last few months, they remain low by historical standards, and many consumers are opting to buy now ahead of any potential increase.

"Consumers recognize that financed purchases will be more expensive with rising rates, and thus are prioritizing them in the current economy," said Erich Patten, portfolio manager at Cutler Investment Group LLC in Seattle. "Demand for soft goods will return as interest rates rise and purchasing patterns normalize."

Since early May, mortgage rates for 30-year loans have risen more than a percentage point. U.S. home resales jumped in July to their highest level in over three years, and some of that surge may reflect buyers rushing to lock in rates before they rise further.

Still, data showed that sales of new, single-family homes plunged to their lowest level in nine months last month, casting a shadow over the U.S. housing recovery.

Auto sales to U.S. consumers beat expectations in July and major automakers reported low inventories for many hot-selling models, suggesting sales would strengthen further.

The near-term spending in housing and automotive sectors "is crowding out other spending," Target Corp (TGT.N) Chairman and CEO Gregg Steinhafel said on an August 21 call. He said that his chain sees "a mix of signals in which emerging optimism is balanced with continuing challenges."

Consumers are also feeling the pinch of payroll taxes that are 2 percentage points higher this year, as well as slightly higher gas prices, leading them to cut back on discretionary items.

"You can't get out of paying your taxes and you have to have gas to go to work and school. Those are real numbers that really do impact real Americans, and I think that's where other discretionary spend takes a hit," said Alison Paul, vice chairman and U.S. retail and distribution leader at Deloitte LLP.

According to a poll of 1,100 U.S. consumers by Ipsos for Reuters this month, 26 percent plan to spend less on clothing this holiday season, while only 12 percent say they expect to spend more.

A few retailers, including Ann Inc (ANN.N), posted a rise in quarterly comparable store sales this week.

"We're not saying run away from apparel," said Shawn Kravetz, president of Esplanade Capital. "We're saying you have to make sure it really looks good on you. Investors just have to be choosier than ever because it has gotten very messy and very challenging very quickly."

(Reporting by Jessica Wohl in Chicago and Phil Wahba in New York. Additional reporting by Jason Lange in Washington, Dhanya Skariachan in New York; Editing by Jilian Mincer and Ken Wills)

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Analysis: Spending on cars, homes threatens apparel sales as holidays approach

By Jessica Wohl and Phil Wahba

Mon Aug 26, 2013 7:07am EDT

n">(Reuters) - Even with consumer confidence at a six-year high, retailers ranging from Target Corp (TGT.N) to Macy's Inc (M.N) are competing not only with each other but are also having to adapt to shifting spending patterns.

Many consumers are taking advantage of still-low interest rates, purchasing cars and houses, but at the same time they are holding back on shirts, dresses and shoes, which doesn't bode well for many retailers in the run-up to the year-end holiday season.

"People are putting their money into things that will last," said Jill Puleri, IBM's global industry leader for retail. "If you look at appliances, if you look at jewelry, these are not necessarily small purchases. They're rewarding each other ... They're putting money where things are more stable."

IBM expects U.S. appliance sales to rise 6 percent in the current third quarter, with sales of other home goods up 1.67 percent. For the holiday season, it expects appliance sales to rise 2.13 percent and sales of home goods to rise 1.98 percent, while anticipating the steepest decline, 3.62 percent, in men's apparel.

That's good news for companies such as home improvement chains Home Depot Inc (HD.N) and Lowe's Cos Inc (LOW.N), which reported strong quarterly results and raised their fiscal year forecasts as people spruced up their homes.

In contrast, Macy's, Kohl's Corp (KSS.N), Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and even luxury chains such as Saks Inc (SKS.N) and Nordstrom Inc (JWN.N) posted disappointing second-quarter sales in recent weeks, and many aren't hopeful about the holidays.

"As people are spending more money on their cars and homes, they are cutting back elsewhere, such as their spending on items like clothes and shoes," Sears Holdings Corp (SHLD.O) Chairman and Chief Executive Edward Lampert told Reuters in an interview.

Macy's, which gets about 80 percent of sales from clothing, lowered its sales forecast for the year after it noticed spending shifting away from what department store chains offer.

"The problem now is that there is no fashion, and if there is no newness, clothing becomes a commodity," said Patty Edwards, chief investment officer of Trutina Financial, which sold Nordstrom earlier this year, but owns Michael Kors Holdings Ltd (KORS.N), PVH Corp (PVH.N) and Nike Inc (NKE.N). "Beyond a select few, I'd think twice about getting into apparel and retail stocks."

Some of the biggest hedge funds are shifting out of the sector. An analysis of holdings in the most recent quarter of the top 30 hedge funds by Thomson Reuters shows consumer discretionary stocks suffered the third biggest decline in the period, falling 2.15 percent. Only energy and materials had larger declines, at 5.25 and 11.59, respectively. The research shows that money shifted into healthcare, telecoms and technology stocks.

POTENTIALLY WEAK HOLIDAY SALES

While interest rates have risen sharply in the last few months, they remain low by historical standards, and many consumers are opting to buy now ahead of any potential increase.

"Consumers recognize that financed purchases will be more expensive with rising rates, and thus are prioritizing them in the current economy," said Erich Patten, portfolio manager at Cutler Investment Group LLC in Seattle. "Demand for soft goods will return as interest rates rise and purchasing patterns normalize."

Since early May, mortgage rates for 30-year loans have risen more than a percentage point. U.S. home resales jumped in July to their highest level in over three years, and some of that surge may reflect buyers rushing to lock in rates before they rise further.

Still, data showed that sales of new, single-family homes plunged to their lowest level in nine months last month, casting a shadow over the U.S. housing recovery.

Auto sales to U.S. consumers beat expectations in July and major automakers reported low inventories for many hot-selling models, suggesting sales would strengthen further.

The near-term spending in housing and automotive sectors "is crowding out other spending," Target Corp (TGT.N) Chairman and CEO Gregg Steinhafel said on an August 21 call. He said that his chain sees "a mix of signals in which emerging optimism is balanced with continuing challenges."

Consumers are also feeling the pinch of payroll taxes that are 2 percentage points higher this year, as well as slightly higher gas prices, leading them to cut back on discretionary items.

"You can't get out of paying your taxes and you have to have gas to go to work and school. Those are real numbers that really do impact real Americans, and I think that's where other discretionary spend takes a hit," said Alison Paul, vice chairman and U.S. retail and distribution leader at Deloitte LLP.

According to a poll of 1,100 U.S. consumers by Ipsos for Reuters this month, 26 percent plan to spend less on clothing this holiday season, while only 12 percent say they expect to spend more.

A few retailers, including Ann Inc (ANN.N), posted a rise in quarterly comparable store sales this week.

"We're not saying run away from apparel," said Shawn Kravetz, president of Esplanade Capital. "We're saying you have to make sure it really looks good on you. Investors just have to be choosier than ever because it has gotten very messy and very challenging very quickly."

(Reporting by Jessica Wohl in Chicago and Phil Wahba in New York. Additional reporting by Jason Lange in Washington, Dhanya Skariachan in New York; Editing by Jilian Mincer and Ken Wills)

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Pending sales of US homes slip from 6-year high

WASHINGTON (AP) — The number of Americans who signed contracts to buy homes dipped in June from a six-year high in May, a sign that sales could stabilize over the next few months.

The National Association of Realtors said Monday that its seasonally adjusted index for pending home sales ticked down 0.4 percent to 110.9 in June. The May reading was revised lower by a percentage point to 111.3, but it was still the highest since December 2006.

The slight decline suggests higher mortgage rates may be starting to slow sales. Still, signed contracts are 10.9 percent higher than they were a year ago. There is generally a one- to two-month lag between a signed contract and a completed sale.

Economists were relieved after seeing only a modest decline. They said that shows higher mortgage rates are having only a small impact on the home sales market.

"All told ... pending home sales held up fantastically well," Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage, said in a note to clients.

The average rate on a 30-year fixed mortgage has jumped a full percentage point since early May and reached a two-year high of 4.51 percent in late June.

Rates surged after Chairman Ben Bernanke said the Federal Reserve could slow its bond-buying program later this year if the economy continues to improve. The Fed's bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.

In recent weeks, Bernanke and other Fed members have stressed that any change in the bond-buying program will depend on the economy's health, not a set calendar date.

Since those comments, interest rates have declined. The average on the 30-year mortgage was 4.31 percent last week.

Even with higher mortgage rates, signed contracts increased in the West last month. They were unchanged in the Northeast and fell in the South and Midwest.

Home sales and prices have climbed since early last year, buoyed by solid hiring and historically low mortgage rates. Housing has been an important driver of economic growth this year as other parts of the economy have languished, such as manufacturing and business investment.

Sales of previously occupied homes slipped last month, after a big rise in May to the highest level in 3 ½ years.

But new-home sales jumped in June to the fastest pace in five years, boosting confidence that the housing recovery is strengthening.

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Photos: Frank Lloyd Wright Homes For Sale

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Photos: Frank Lloyd Wright Homes For Sale

External links are provided for reference purposes. ABC News is not responsible for the content of external Internet sites. Copyright © 2013 ABC News Internet Ventures. Yahoo! - ABC News Network

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