TRI Pointe Homes IPO Benefits from Housing Recovery

The strong performance by today’s TRI Pointe Homes IPO is the latest proof of Wall Street’s faith in the ongoing housing recovery.

Shares of the California-based single-family homebuilder are up 13% in their market debut despite pricing above their expected IPO range. TRI Pointe Homes, listed on the New York Stock Exchange under the symbol TPH, was supposed to go public between $14 and $16 per share, but instead opened at $17 a share this morning. The stock had already risen to $19.23 a share as of 1 p.m. eastern time.

TRI Pointe’s meteoric first-day rise is likely a reflection of investors’ appetite for housing stocks right now. XHB, the ETF that tracks large-cap homebuilder stocks, has risen 37% in the last six months. ITB, an exchange-traded fund that tracks home construction stocks in the Dow Jones Industrial, is up 45% over that same time span.

2012 was the best year for U.S. home sales since before the recession, in 2007. Meanwhile, home prices rose 7.4% in November – the biggest year-over-year increase since 2006. Those are just two of the many factors fueling speculation that America is in the midst of a full-blown housing recovery less than five years removed from the subprime mortgage crisis.

Homebuilding companies like TRI Pointe are benefitting, and their shares are soaring. After today’s performance from TRI Pointe, we’re sure to see plenty more housing-stock IPOs in the coming months.