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3 Top Housing Stocks You'll Regret Not Buying Soon
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The home builder sector, which predominantly consists of homebuilders, building product manufacturers, and home improvement companies, has gained decently this year. The home construction ETF has jumped around 12% over the past three months compared to the broader S&P 500’s gain of a meager 2.7%.
This is in sharp contrast to last year, when the housing market had to bear the adverse impact of surging raw material prices and an increase in mortgage rates. However, the first year-over-year decrease in home prices in 11 years in February, coupled with lower mortgage prices, especially between mid-November through the beginning of last month, immensely boosted the struggling housing market. Existing home sales in the United States rebounded more than expected in the month.
Existing home sales soared by 14.5% to a seasonally adjusted annual rate of 4.58 million, per the National Association of Realtors. This was the biggest jump since July 2020, and well above estimates of 4.2 million. Existing home sales were broad-based, with the South, West, and Midwest regions registering double-digit growth.
It seems the worst may be over for the housing market, as the cooling of housing prices should certainly attract more buyers. In January, the median sales price of new houses declined nearly 1% year over year to $427,500. At the same time, inflation has been easing for some time now, which should undoubtedly compel the Federal Reserve to reduce the pace of its interest rate hikes. The central bank curtailed the increase in interest rate hikes, which currently stands at 0.25% versus 0.75% last year.
Thus, the average 30-year mortgage rate has decreased considerably in recent times, thereby making financing new houses a bit cheaper. To top it, presently, there is undersupply of homes, indicating that any company which is part of the home builder sector could easily make the most of the demand-supply disparity when the economy gathers steam.
Given such positives, it is prudent to invest in fundamentally sound housing stocks like Toll Brothers, Inc. (TOL - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and NVR, Inc. (NVR - Free Report) that are well poised to scale upward as the home builder sector bounces back.
These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Toll Brothers build 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, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%.
Tecnoglass is engaged in manufacturing and selling architectural glass and windows and aluminum products for the residential complexes and commercial construction industries. The company, presently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10.7% over the past 60 days. TGLS’ expected earnings growth rate for the current year is 15.4%.
NVR is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The company, currently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 22.7% over the past 60 days. NVR’s expected earnings growth rate for the next five-year period is 4.3%.
Shares of Toll Brothers, Tecnoglass and NVR, by the way, have already gained 16.7%, 24.8%, and 18.9%, respectively, on a year-to-date basis.
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3 Top Housing Stocks You'll Regret Not Buying Soon
The home builder sector, which predominantly consists of homebuilders, building product manufacturers, and home improvement companies, has gained decently this year. The home construction ETF has jumped around 12% over the past three months compared to the broader S&P 500’s gain of a meager 2.7%.
This is in sharp contrast to last year, when the housing market had to bear the adverse impact of surging raw material prices and an increase in mortgage rates. However, the first year-over-year decrease in home prices in 11 years in February, coupled with lower mortgage prices, especially between mid-November through the beginning of last month, immensely boosted the struggling housing market. Existing home sales in the United States rebounded more than expected in the month.
Existing home sales soared by 14.5% to a seasonally adjusted annual rate of 4.58 million, per the National Association of Realtors. This was the biggest jump since July 2020, and well above estimates of 4.2 million. Existing home sales were broad-based, with the South, West, and Midwest regions registering double-digit growth.
It seems the worst may be over for the housing market, as the cooling of housing prices should certainly attract more buyers. In January, the median sales price of new houses declined nearly 1% year over year to $427,500. At the same time, inflation has been easing for some time now, which should undoubtedly compel the Federal Reserve to reduce the pace of its interest rate hikes. The central bank curtailed the increase in interest rate hikes, which currently stands at 0.25% versus 0.75% last year.
Thus, the average 30-year mortgage rate has decreased considerably in recent times, thereby making financing new houses a bit cheaper. To top it, presently, there is undersupply of homes, indicating that any company which is part of the home builder sector could easily make the most of the demand-supply disparity when the economy gathers steam.
Given such positives, it is prudent to invest in fundamentally sound housing stocks like Toll Brothers, Inc. (TOL - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and NVR, Inc. (NVR - Free Report) that are well poised to scale upward as the home builder sector bounces back.
These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Toll Brothers build 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, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%.
Tecnoglass is engaged in manufacturing and selling architectural glass and windows and aluminum products for the residential complexes and commercial construction industries. The company, presently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10.7% over the past 60 days. TGLS’ expected earnings growth rate for the current year is 15.4%.
NVR is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The company, currently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 22.7% over the past 60 days. NVR’s expected earnings growth rate for the next five-year period is 4.3%.
Shares of Toll Brothers, Tecnoglass and NVR, by the way, have already gained 16.7%, 24.8%, and 18.9%, respectively, on a year-to-date basis.
Image Source: Zacks Investment Research