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5 Stocks to Buy as Mortgage Rates Slide to New Record Low
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A relentless rise in coronavirus cases is, no doubt, hindering plans of reopening the broader economy. However, this has been a blessing in disguise for the U.S. housing market. Given the current remote working trend and massive migration from cities to lower populated suburbs to avoid getting infected, demand for houses has been strong and record-low mortgage rates are an added bonus for homebuyers.
Mortgage Rates Hit 14th New Low This Year
According to mortgage company Freddie Mac’s report, the 30-year fixed mortgage rate sunk to a new record low for the week ending Dec 3, averaging 2.71%. The 30-year fixed mortgage has now hit a record low for the 14th time this year. The pandemic-led closures and economic disruptions had pushed the Federal Reserve to slash interest rate near zero (0.00–0.25%). Though the Fed’s interest rates do not directly impact mortgage rates, lower rates lead to decrease in adjustable-rate mortgage payments. Hence, many homebuyers opt for refinancing when theinterest rate is low.
With the pandemic still hindering plans of an economic rebound, the Fed is hinting at plans to keep rates unchanged or near zero into 2024, which suggests a further drop in mortgage rates. This historically-low borrowing cost has boosted the housing market as sales have surged and homebuilders are struggling to keep up with the demand pace. In October, existing-home sales jumped for the fifth consecutive month, rising 4.3% to an annualized rate of 6.85 million, according to report released by the National Association of Realtors on Nov 19.
Homebuilders have also begun construction of houses despite headwinds like shortage of lumber, other supplies and labors due to the pandemic-led disruptions.The U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units in October. In fact, the report underlined a 6.4% jump in single-family housing starts in the Northeast, South, the mountainous regions and the sparsely populated areas of the West. Homebuilding activities have spiked in these regions as Americans are constantly shifting their homes to less populated areas.
Construction Spending Rebounded in October
Adding to the positive report, construction spending rose in October. According to the U.S. Census Bureau’s report, “construction spending during October 2020 was estimated at a seasonally adjusted annual rate of $1,438.5 billion,” a 1.3% rise from September’s estimate of $1,420.4 billion. The jump was higher than the consensus estimate of a 0.8% rise and much above the September’s revised figure of 0.5% decline. Per the report, residential single-family homes soared 5.6%, while multifamily projects rose 1.2%.
Builder Confidence Tops Record in November
With the prevailing low mortgage rates and people migrating to the suburbs, homebuilders have grown optimistic about higher demand in the coming months. The National Association of Home Builders (NAHB) and Wells Fargo Housing Market homebuilder confidence Indextouched a record high of 90 in November, per a Housingwire article. In fact, NAHB Chairman Chuck Fowke believes that “historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis.”
5 Stocks to Buy
Given the current scenario and boom in the housing space, we have shortlisted five stocks that flaunt a Zacks Rank #1 (Strong Buy) and are poised to grow. You can see the complete list of today’s Zacks #1 Rank stocks here.
Century Communities, Inc. (CCS - Free Report) engages in the design, development, construction, marketing, and sale of single-family attached and detached homes. The company’s expected earnings growth rate for the current year is 25.9% compared with the Zacks Building Products - Home Builders industry’s projected earnings growth of 7.6%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 17.5% upward over the past 60 days.
Lennar Corporation (LEN - Free Report) operates as a homebuilder that engages in construction and sale of single-family attached and detached homes as well as the purchase, development, and sale of residential land. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 25.4% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 12.3% upward over the past 90 days.
PulteGroup, Inc. (PHM - Free Report) acquires and develops land primarily for residential purposes and constructs single-family detached, townhouses, condominiums, and duplexes. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 41.3% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 15.5% upward over the past 60 days.
TRI Pointe Group, Inc. (TPH - Free Report) engages in the design, construction, and sale of single-family detached and attached homes. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 27.9% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 22.1% upward over the past 60 days.
Beazer Homes USA, Inc. (BZH - Free Report) designs, constructs, and sells single-family and multi-family homes under the Beazer Homes, Gatherings, and Choice Plans names. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of more than 100% in the current quarter. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 20.6% upward over the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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5 Stocks to Buy as Mortgage Rates Slide to New Record Low
A relentless rise in coronavirus cases is, no doubt, hindering plans of reopening the broader economy. However, this has been a blessing in disguise for the U.S. housing market. Given the current remote working trend and massive migration from cities to lower populated suburbs to avoid getting infected, demand for houses has been strong and record-low mortgage rates are an added bonus for homebuyers.
Mortgage Rates Hit 14th New Low This Year
According to mortgage company Freddie Mac’s report, the 30-year fixed mortgage rate sunk to a new record low for the week ending Dec 3, averaging 2.71%. The 30-year fixed mortgage has now hit a record low for the 14th time this year. The pandemic-led closures and economic disruptions had pushed the Federal Reserve to slash interest rate near zero (0.00–0.25%). Though the Fed’s interest rates do not directly impact mortgage rates, lower rates lead to decrease in adjustable-rate mortgage payments. Hence, many homebuyers opt for refinancing when theinterest rate is low.
With the pandemic still hindering plans of an economic rebound, the Fed is hinting at plans to keep rates unchanged or near zero into 2024, which suggests a further drop in mortgage rates. This historically-low borrowing cost has boosted the housing market as sales have surged and homebuilders are struggling to keep up with the demand pace. In October, existing-home sales jumped for the fifth consecutive month, rising 4.3% to an annualized rate of 6.85 million, according to report released by the National Association of Realtors on Nov 19.
Homebuilders have also begun construction of houses despite headwinds like shortage of lumber, other supplies and labors due to the pandemic-led disruptions.The U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units in October. In fact, the report underlined a 6.4% jump in single-family housing starts in the Northeast, South, the mountainous regions and the sparsely populated areas of the West. Homebuilding activities have spiked in these regions as Americans are constantly shifting their homes to less populated areas.
Construction Spending Rebounded in October
Adding to the positive report, construction spending rose in October. According to the U.S. Census Bureau’s report, “construction spending during October 2020 was estimated at a seasonally adjusted annual rate of $1,438.5 billion,” a 1.3% rise from September’s estimate of $1,420.4 billion. The jump was higher than the consensus estimate of a 0.8% rise and much above the September’s revised figure of 0.5% decline. Per the report, residential single-family homes soared 5.6%, while multifamily projects rose 1.2%.
Builder Confidence Tops Record in November
With the prevailing low mortgage rates and people migrating to the suburbs, homebuilders have grown optimistic about higher demand in the coming months. The National Association of Home Builders (NAHB) and Wells Fargo Housing Market homebuilder confidence Indextouched a record high of 90 in November, per a Housingwire article. In fact, NAHB Chairman Chuck Fowke believes that “historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis.”
5 Stocks to Buy
Given the current scenario and boom in the housing space, we have shortlisted five stocks that flaunt a Zacks Rank #1 (Strong Buy) and are poised to grow. You can see the complete list of today’s Zacks #1 Rank stocks here.
Century Communities, Inc. (CCS - Free Report) engages in the design, development, construction, marketing, and sale of single-family attached and detached homes. The company’s expected earnings growth rate for the current year is 25.9% compared with the Zacks Building Products - Home Builders industry’s projected earnings growth of 7.6%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 17.5% upward over the past 60 days.
Lennar Corporation (LEN - Free Report) operates as a homebuilder that engages in construction and sale of single-family attached and detached homes as well as the purchase, development, and sale of residential land. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 25.4% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 12.3% upward over the past 90 days.
PulteGroup, Inc. (PHM - Free Report) acquires and develops land primarily for residential purposes and constructs single-family detached, townhouses, condominiums, and duplexes. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 41.3% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 15.5% upward over the past 60 days.
TRI Pointe Group, Inc. (TPH - Free Report) engages in the design, construction, and sale of single-family detached and attached homes. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of 27.9% in the current year. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 22.1% upward over the past 60 days.
Beazer Homes USA, Inc. (BZH - Free Report) designs, constructs, and sells single-family and multi-family homes under the Beazer Homes, Gatherings, and Choice Plans names. This company that belongs to the Zacks Building Products - Home Builders industry has an expected earnings growth rate of more than 100% in the current quarter. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 20.6% upward over the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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