Horton Trumped By TARP

Actions by the U.S. Treasury on Tuesday were all home building investors needed to push the sector up, fueling hopes that a bottom for housing is near.

Shares of D.R. Horton (nyse: DHI - news - people ) were up 38.0%, or $1.90, to close at $6.90, on Tuesday afternoon. The other builders were enjoying a jump in their stock prices as well; Lennar (nyse: LEN - news - people ) rose 33.8%, or $1.55, to $6.13, while Pulte Homes (nyse: PHM - news - people ) was up 12.1%, or $1.06, to $9.82.

The Federal Reserve undertook a massive program to reflate the U.S. economy Tuesday, focusing on consumers and, most important for the home builders, housing. The central bank is planning to purchase $500.0 billion of mortgage-backed securities and buy $100.0 billion in direct obligations from Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks. Pulling all of that debt out of the market and putting cash in the hands of its previous holders, should reduce borrowing costs. The Fed also said it would make loans totaling $200.0 billion to holders of recently issued asset-backed securities, again encouraging new loans to be made. read more