Fletcher Building's share price surged to is highest point in almost five months today as positive signals began to emerge from the domestic housing and construction sector.
At one point, shares in Fletcher Building hit $6.92, up 22 cents from Friday's closing price, and level with where they were early in October last year. The stock ended the day at $6.85, up 15c (2.2 per cent), while another key construction stock, Steel and Tube, closed 9c (4 per cent) higher at $2.32.
Brokers said it was difficult to tell what was behind Fletcher Building's share price gain, but they pointed to a modest improvement in the residential construction sector, which last year suffered its worst downturn since records began in 1965, as being a possible reason.
Statistics NZ said building activity increased 2.9 per cent in the December 2011 quarter, following the previous quarter's 10-year low.
The increase was led by residential building activity _ up 4.4 percent, after adjusting for price and seasonal effects _ and building work in Canterbury also appeared to boost the figures.
Fletcher Building reported its result for the first half to December 31 on February 22, so the Statistics NZ information was largely historical for followers of the company, but in a separate report brokers Goldman Sachs NZ said its quarterly home builders survey, taken late last month, showed a marked resurgence in confidence.
The survey, which was of 14 major homebuilders and which had a response rate 93 per cent, said optimism was fuelled by the impending Christchurch rebuild and the emergence of an underlying residential recovery.
"Since the start of he new year, the news flow for New Zealand residential _ which is a key exposure for Fletcher Building _ has been positive,'' Goldman Sachs analyst Matthew Henry told APNZ. "The data does suggest that we'll see something of a residential pickup through 2012, remembering that we are coming off a very low base,'' he said.
There were also grounds for optimism to be taken from real estate company Barfoot and Thompson, which said sales continued to trend higher.
Bank of NZ economists said higher sales were a positive leading indicator for prices and, eventually, building.
House sales in February were 23 per cent up on year earlier levels and 5.0 per cent seasonally adjusted on the previous month.
Sale prices, however, while still positive, were up only 2.7 per cent on year earlier levels, Barfoot and Thompson said.
