Is debt better than equity for homebuilders?

The investor excitement over homebuilding may depend on which side of the street you're on.

Judging by the share price of newly traded WCI Communities (symbol: WCIC), equity investors seem to have lost some of their euphoria for homebuilding stocks.

Bonita Springs-based developer and homebuilder WCI shares started trading on the New York Stock Exchange for $15 a share recently, significantly less than the $21 to $23 a share the company expected just one month ago.

So WCI is now turning to the debt market. The company says now it plans to sell $200 million in debt, though a statement by the company didn't spell out how much that would cost or when it would be sold. A spokesperson declined to comment, but a brief news release says WCI says it plans to use the proceeds to pay off existing debt and acquire more land.

Considering Wall Street's tepid reception to WCI's stock offering and relatively low interest rates, the company's debt offering may be the best way to go until the homebuilding business rebounds more fully.