Aerial drone view of a residential area of a small Welsh town surrounded by hills (Ebbw Vale, South Wales, UK)
The Taylor Wimpey share price jumped for the sixth consecutive days after the relatively strong housing numbers from the UK. The TW stock rose to 185p, which was the highest level since April 28. It has risen by more than 24% from its lowest level in July.
Taylor Wimpey, Persimmon, and Barratt Development are the three biggest homebuilders in the UK. The three companies have a market share of more than 50% of the total homebuilding market.
Taylor Wimpey and its peers have had a mixed period in the past few months. For one, demand for homes has jumped substantially in the past few months, helped by low mortgage rates and the stamp duty holiday.
This rising demand has led to a substantial jump in house prices. A report published on Wednesday by Nationwide said that house prices jumped by 2.1% in August after falling in the previous two months. This increase was the highest gain in more than 15 years. An analyst at the society said:
“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market.”
While home prices have jumped by more than 20,000 pounds during the pandemic home builders are not all that excited. For one, they expect that this demand will start tapering as the stamp duty holiday ends. At the same time, the cost of building has increased substantially in the past few months. For example, the ongoing labour shortage has made it more expensive for homebuilders.
The most recent results showed that Taylor Wimpey is doing well. In August, the company, which is the third-biggest developer, said that it expects to make an operating profit of about $1.14 billion. This was substantially higher than the median estimate by analysts. Its half year revenue rose to more than 2.2 billion pounds.
The daily chart shows that the TW share price has been in a strong rebound lately. It has risen by more than 24% in the past few weeks. Along the way, the stock has moved above the 25-day moving average and formed an inverted head and shoulders pattern. The Relative Strength Index (RSI) has also been on a strong bullish trend.
Therefore, the path of the least resistance of the stock is to the upside. If this happens, the next key level to watch will be the YTD high of 193.70p.