U.S. existing home sales bounced back in June after four straight months of decline. The home market had somewhat slowed down in recent months after a robust 2020. However, the rise in June once again indicates the existing demand for homes in the United States.
Rising prices and low inventory have been concerns for the homebuilding market lately but that hasn’t stopped people from hunting for new homes.
Behind the Rise in Existing Home Sales
The National Association of Realtors said on Jul 22 that existing home sales grew 1.4% month over month in June to a seasonally adjusted annual rate of 5.86 million units after four straight months of decline. Sales grew primarily in the Northeast, West and Midwest. On a year-over-year basis, existing home sales jumped 22.9%.
Home resales account for the majority of U.S. home sales and once again prove that demand is high despite rising prices. Demand for homes was already high and the pandemic saw it escalating further as a huge number of people rushed to buy homes in less-populated areas to avoid contracting the deadly coronavirus.
Moreover, many started looking for bigger homes during the pandemic as they needed more space to work and learn remotely. This sent the homebuilding market on a tear.
Homebuilding Market Still Going Strong
The jump in existing home sales comes just a day after the Commerce Department said that housing starts jumped 6.3% to a seasonally adjusted annual rate of 1.643 million units in June. However, housing permits declined in the month.
The supply chain was already tight before the pandemic, which has further pushed up costs of lumber and concrete. Moreover, mortgage rates that were at multi-year highs have also increased. Even then, demand hasn’t slowed and is driving the homebuilding market.
There were already fewer homes compared to the high demand before the pandemic, and now fewer homeowners are willing to list their homes for sale. This is further helping to boost home prices and the trend is likely to continue in the days to come.
The homebuilding market is still going strong despite rising prices and demand for homes is going to continue through 2021. This thus makes for an opportune time to invest in homebuilding stocks.
KB Home ( KBH Quick Quote KBH - Free Report) is a well-known homebuilder in the United States. The company’s Homebuilding operations include building and designing homes that cater to first-time, move-up and active adult homebuyers on acquired or developed lands.
The company’s expected earnings growth rate for the current year is 99.4%. The Zacks Consensus Estimate for current-year earnings has improved 10.1% over the past 60 days. The company carries a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Lennar Corporation ( LEN Quick Quote 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 the current year is 72.5%. The Zacks Consensus Estimate for current-year earnings has improved 17.3% over the past 60 days. The company carries a Zacks Rank #1.
Toll Brothers Inc. ( TOL Quick Quote TOL - Free Report) builds single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves.
The company’s expected earnings growth rate for the current year is 65%. The Zacks Consensus Estimate for current-year earnings has improved 8.3% over the past 60 days. The company sports a Zacks Rank #1.
TRI Pointe Group, Inc. ( TPH Quick Quote 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 the current year is 46.1%. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past 60 days. TRI Pointe has a Zacks Rank #2.