The builder's contract backlog, an indication of future sales, rose 48 percent from a year earlier to 2,298 homes. The cancellation rate was 17 percent, down from 20 percent in the second quarter of 2011.

Chief Executive Officer Ara Hovnanian said the company was able to increase prices or reduce incentives in about 40 percent of its communities during the first half of fiscal 2012.

‘‘As our sales pace is increased, we have tested pricing increases,” he said during a conference call with investors. “We've been gradually increasing prices because the last thing we want to do is push prices too far and slow down our sales pace.”

Eoin Treacy's view The positive tone evident in the results of various US homebuilders contrasts sharply with the views of Gary Shilling, who is interviewed by Bloomberg TV via this embedded link.

The pace of home foreclosures have been decelerating since late 2010 and particularly since the major banks scaled back aggressive repossessions as the robo-signing scandal broke and the practice became a political liability. There is a risk that pace of foreclosures increases again following the settlement agreed in February between the five largest mortgage lenders and most of the states. However, it is also worth considering that the housing slump is now five years old, affordability has increased and differentiation between locations is once more an important factor in pricing.

Lennar Corp has been among the best performers in the sector. It encountered resistance in the region of $30 from late April and retested the region of the 200-day MA this week. A sustained move below $22.50 would be required to question medium-term scope for additional higher to lateral ranging.

Toll Brothers hit a new 5-year high last week but pulled back sharply to form a large weekly key reversal. It found at least short-term support in the region of the 200-day MA and the progression of higher reaction lows on Tuesday and a sustained move below $24 would now be required to question potential for some additional support building in this area. Meritage Homes and Horton (D.R.) Inc. have relatively similar patterns but have been less volatile. NVR Inc. is the only share in the sector within relatively close proximity of its high but otherwise has a relatively similar pattern.

Pulte Group rallied to break the multi-year downtrend in February and has been ranging mostly below $10 since. It found at least near-term support in the region of the 200-day MA this week and a sustained move below $8 would be required to question medium-term scope for additional upside. M.D.C Holdings, Ryland Group and Standard Pacific have relatively similar patterns.