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Housing Market Continues to be a Bright Spot: 4 Winners
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The U.S. housing market has been one of the show-stealers during the pandemic. While most sectors have been taking a beating, the housing market seems to be swimming against the tide. In fact, it has been on a tear with homebuilder sentiment touching new highs and home prices setting new records.
The housing market has been doing well ever since the economy reopened in June. And despite the recent surge in COVID-19 cases, the housing market has remained relatively unaffected. This means that both homebuilders and buyers have started showing confidence in the economy, signaling that the worst of the economic downturn is probably over.
Home Prices Head North
With growing demand for homes and supply shortage, home prices have been on the rise. However, people aren’t hesitating to shell out more, which has kept home prices at record highs over the past few months. According to a report from the Federal Housing Finance Agency, U.S. home prices jumped a record 3.1% in the third quarter from the prior quarter and7.8% rise from the year-ago levels.
New home sales have also been on a tear over the past couple of quarters. According to the last report released by the Commerce Department in late November, sales of new homes jumped 41.5% on a year-over-year basis in October.
Also, homebuilder sentiment is on a high. According to the most recent NAHB/Wells Fargo Housing Market Index, homebuilder sentiment came in at 86 points. Although it’s a slight dip after three straight months of record highs, it’s the second-highest reading in the index’s history dating back to 1985. Last year, the index stood at 76 in December.
Low Mortgage, Other Factors Pushing Demand
Record low mortgage rates have been helping home sales and the trend is likely to boost the market in the future too. Mortgage rates have now fallen to their 14th record low in 2020, the latest being in the end of November, indicating that it is going to help the homebuilding market further.
Moreover, builders have been complaining of shortage of material and land. There were already fewer homes to meet demand before the pandemic, and now fewer homeowners are willing to list their homes for sale. This is helping home prices further and the trend is likely to continue in the days to come.
Our Choices
Record low mortgage rate is helping to boost home prices, which is giving a boost to new and existing home sales, and thus helping homebuilder sentiment. This is also an indication that buyers are showing confidence in the economy. In this opportune time to invest in homebuilding, we suggest five stocks with a Zacks Rank #1 (Strong Buy) that are likely to gain ahead. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beazer Homes USA, Inc. (BZH - Free Report) designs, builds and sells single-family homes. The company designs homes to appeal primarily to entry-level and first move-up homebuyers.
The company’s expected earnings growth rate for the next year is 24.9%. The Zacks Consensus Estimate for current-year earnings has improved 20.6% over the past 60 days.
D.R. Horton, Inc. (DHI - Free Report) is one of the leading national homebuilders, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets.
The company’s expected earnings growth rate for next year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the past 60 days.
TRI Pointe Group, Inc. (TPH - Free Report) is involved in the design, construction and sale of single-family homes. The company's operating portfolio includes Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia.
The company’s expected earnings growth rate for next year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days.
Lennar Corporation (LEN - Free Report) is engaged in homebuilding and financial services in the United States. The company’s reportable segments consist of Homebuilding, Lennar Financial Services, Rialto and Lennar Multifamily.
The company’s expected earnings growth rate for next year is 15.2%. The Zacks Consensus Estimate for current-year earnings has improved 13.3% over the past 60 days.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Image: Bigstock
Housing Market Continues to be a Bright Spot: 4 Winners
The U.S. housing market has been one of the show-stealers during the pandemic. While most sectors have been taking a beating, the housing market seems to be swimming against the tide. In fact, it has been on a tear with homebuilder sentiment touching new highs and home prices setting new records.
The housing market has been doing well ever since the economy reopened in June. And despite the recent surge in COVID-19 cases, the housing market has remained relatively unaffected. This means that both homebuilders and buyers have started showing confidence in the economy, signaling that the worst of the economic downturn is probably over.
Home Prices Head North
With growing demand for homes and supply shortage, home prices have been on the rise. However, people aren’t hesitating to shell out more, which has kept home prices at record highs over the past few months. According to a report from the Federal Housing Finance Agency, U.S. home prices jumped a record 3.1% in the third quarter from the prior quarter and7.8% rise from the year-ago levels.
New home sales have also been on a tear over the past couple of quarters. According to the last report released by the Commerce Department in late November, sales of new homes jumped 41.5% on a year-over-year basis in October.
Also, homebuilder sentiment is on a high. According to the most recent NAHB/Wells Fargo Housing Market Index, homebuilder sentiment came in at 86 points. Although it’s a slight dip after three straight months of record highs, it’s the second-highest reading in the index’s history dating back to 1985. Last year, the index stood at 76 in December.
Low Mortgage, Other Factors Pushing Demand
Record low mortgage rates have been helping home sales and the trend is likely to boost the market in the future too. Mortgage rates have now fallen to their 14th record low in 2020, the latest being in the end of November, indicating that it is going to help the homebuilding market further.
Moreover, builders have been complaining of shortage of material and land. There were already fewer homes to meet demand before the pandemic, and now fewer homeowners are willing to list their homes for sale. This is helping home prices further and the trend is likely to continue in the days to come.
Our Choices
Record low mortgage rate is helping to boost home prices, which is giving a boost to new and existing home sales, and thus helping homebuilder sentiment. This is also an indication that buyers are showing confidence in the economy. In this opportune time to invest in homebuilding, we suggest five stocks with a Zacks Rank #1 (Strong Buy) that are likely to gain ahead. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beazer Homes USA, Inc. (BZH - Free Report) designs, builds and sells single-family homes. The company designs homes to appeal primarily to entry-level and first move-up homebuyers.
The company’s expected earnings growth rate for the next year is 24.9%. The Zacks Consensus Estimate for current-year earnings has improved 20.6% over the past 60 days.
D.R. Horton, Inc. (DHI - Free Report) is one of the leading national homebuilders, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets.
The company’s expected earnings growth rate for next year is 13.5%. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the past 60 days.
TRI Pointe Group, Inc. (TPH - Free Report) is involved in the design, construction and sale of single-family homes. The company's operating portfolio includes Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia.
The company’s expected earnings growth rate for next year is 33%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days.
Lennar Corporation (LEN - Free Report) is engaged in homebuilding and financial services in the United States. The company’s reportable segments consist of Homebuilding, Lennar Financial Services, Rialto and Lennar Multifamily.
The company’s expected earnings growth rate for next year is 15.2%. The Zacks Consensus Estimate for current-year earnings has improved 13.3% over the past 60 days.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Start Your Access to the New Zacks Top 10 Stocks >>