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Home Sales Making Steady Rebound: 4 Stocks to Watch
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The U.S. housing market seems to be finally rebounding after suffering for over a year. The homebuilding industry, which was one of the biggest beneficiaries of the pandemic, took a bad hit last year as the Fed continued to raise interest rates. Higher mortgage rates had been hampering demand as prices skyrocketed.
Although interest rates are still high and price issues continue to pose challenges for the sector, sales are rebounding. According to the latest data, both existing and pending home sales have been on the rise, indicating that the sector is on track for a steady recovery.
Home Sales Rising Gradually
The National Association of Realtors (NAR) said on Mar 29 that Pending Home Sales increased 0.8% in February for the third straight month. This is also the highest level since August 2022 and the figures are way better than analysts’ expectations of a decline of 3%.
However, sales were down 21.1% from a year ago. The metric increased month over month in every region except for in the West. However, sales decreased from data taken a year prior.
The unexpected jump in pending home sales comes despite a rise in mortgage rates from early February to early March, according to data from the mortgage finance company, Freddie Mac. However, mortgage rates had been largely declining since November, prior to the most recent increase.
This comes as sales of previously owned homes also rose in February. The National Association of Realtors said on Mar 21 that sales of existing homes jumped 14.5% month over month in January. It is also the first time that existing home sales increased in the past 12 months, indicating that demand for homes in the United States is once again on the rise.
The contracts were most likely signed sometime at the end of 2022 and through January, when mortgage rates had dropped significantly, given these sales statistics are based on closings.
The Zacks Building Products - Home Buildersindustry has climbed 15.8% over the past three months, outpacing the 8% and 5.2% growth of the S&P 500 Index and the Zacks Construction sector, respectively.
The homebuilding industry has been taking a hit for a long time. Labor and raw material costs have been on the rise since 2021, pushing up home prices. If that was not enough the Fed started aggressively hiking interest rates in 2022 to fight multi-decade high inflation.
Although price issues and higher interest rates continue to pose challenges for the homebuilding industry, demand is rising, thus driving sales. Also, Americans seem to be regaining the lost confidence. The Conference Board said on Mar 28 that the Consumer Confidence Index rose to 104.2 in March from an upwardly revised 103.4 in February.
Stocks to Watch
Given this situation, it would be prudent to invest in homebuilding stocks like Taylor Morrison Home Corporation (TMHC - Free Report) , KB Home (KBH - Free Report) , Beazer Homes USA, Inc. (BZH - Free Report) and Lennar Corporation (LEN - Free Report) as the industry shows signs of a steady recovery.
Taylor Morrison Home is a homebuilder and land developer engaged in building single-family detached and attached homes for first-time buyers, move-up families to luxury and active adult customers. TMHC operates under the Taylor Morrison brand, Monarch brand and Darling Homes brand. Taylor Morrison Home operates in Arizona, California, Colorado, Florida and Texas.
Taylor Morrison Home’s expected earnings growth rate for next year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 31.3% over the past 60 days. THMC currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KB Home is a well-known homebuilder in the United States and one of the largest in the state. KBH’s Homebuilding operations include building and designing homes that cater to first-time, move-up and active adult homebuyers on acquired or developed lands. KB Home also builds attached and detached single-family homes, townhomes and condominiums.
KB Home’s expected earnings growth rate for the next year is 4.8%. The Zacks Consensus Estimate for current-year earnings has improved 25.2% over the past 60 days. KBH presently carries a Zacks Rank #2 (Buy).
Beazer Homes USA designs, builds and sells single-family homes. BZH designs homes to appeal primarily to entry-level and first move-up home buyers. Beazer Homes’objective is to provide customers with homes that incorporate quality and value.
Beazer Homes’ expected earnings growth rate for next year is 14.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. BZH presently has a Zacks Rank #3 (Hold).
Lennar is engaged in homebuilding and financial services in the United States. LEN’s reportable segments consist of Homebuilding, Lennar Financial Services, Rialto and Lennar Multifamily.
Lennar’s expected earnings growth rate for next year is 12.8%. The Zacks Consensus Estimate for current-year earnings has improved 14.8% over the past 60 days. LEN presently carries a Zacks Rank #3.
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Home Sales Making Steady Rebound: 4 Stocks to Watch
The U.S. housing market seems to be finally rebounding after suffering for over a year. The homebuilding industry, which was one of the biggest beneficiaries of the pandemic, took a bad hit last year as the Fed continued to raise interest rates. Higher mortgage rates had been hampering demand as prices skyrocketed.
Although interest rates are still high and price issues continue to pose challenges for the sector, sales are rebounding. According to the latest data, both existing and pending home sales have been on the rise, indicating that the sector is on track for a steady recovery.
Home Sales Rising Gradually
The National Association of Realtors (NAR) said on Mar 29 that Pending Home Sales increased 0.8% in February for the third straight month. This is also the highest level since August 2022 and the figures are way better than analysts’ expectations of a decline of 3%.
However, sales were down 21.1% from a year ago. The metric increased month over month in every region except for in the West. However, sales decreased from data taken a year prior.
The unexpected jump in pending home sales comes despite a rise in mortgage rates from early February to early March, according to data from the mortgage finance company, Freddie Mac. However, mortgage rates had been largely declining since November, prior to the most recent increase.
This comes as sales of previously owned homes also rose in February. The National Association of Realtors said on Mar 21 that sales of existing homes jumped 14.5% month over month in January. It is also the first time that existing home sales increased in the past 12 months, indicating that demand for homes in the United States is once again on the rise.
The contracts were most likely signed sometime at the end of 2022 and through January, when mortgage rates had dropped significantly, given these sales statistics are based on closings.
The Zacks Building Products - Home Buildersindustry has climbed 15.8% over the past three months, outpacing the 8% and 5.2% growth of the S&P 500 Index and the Zacks Construction sector, respectively.
The homebuilding industry has been taking a hit for a long time. Labor and raw material costs have been on the rise since 2021, pushing up home prices. If that was not enough the Fed started aggressively hiking interest rates in 2022 to fight multi-decade high inflation.
Although price issues and higher interest rates continue to pose challenges for the homebuilding industry, demand is rising, thus driving sales. Also, Americans seem to be regaining the lost confidence. The Conference Board said on Mar 28 that the Consumer Confidence Index rose to 104.2 in March from an upwardly revised 103.4 in February.
Stocks to Watch
Given this situation, it would be prudent to invest in homebuilding stocks like Taylor Morrison Home Corporation (TMHC - Free Report) , KB Home (KBH - Free Report) , Beazer Homes USA, Inc. (BZH - Free Report) and Lennar Corporation (LEN - Free Report) as the industry shows signs of a steady recovery.
Taylor Morrison Home is a homebuilder and land developer engaged in building single-family detached and attached homes for first-time buyers, move-up families to luxury and active adult customers. TMHC operates under the Taylor Morrison brand, Monarch brand and Darling Homes brand. Taylor Morrison Home operates in Arizona, California, Colorado, Florida and Texas.
Taylor Morrison Home’s expected earnings growth rate for next year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 31.3% over the past 60 days. THMC currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KB Home is a well-known homebuilder in the United States and one of the largest in the state. KBH’s Homebuilding operations include building and designing homes that cater to first-time, move-up and active adult homebuyers on acquired or developed lands. KB Home also builds attached and detached single-family homes, townhomes and condominiums.
KB Home’s expected earnings growth rate for the next year is 4.8%. The Zacks Consensus Estimate for current-year earnings has improved 25.2% over the past 60 days. KBH presently carries a Zacks Rank #2 (Buy).
Beazer Homes USA designs, builds and sells single-family homes. BZH designs homes to appeal primarily to entry-level and first move-up home buyers. Beazer Homes’objective is to provide customers with homes that incorporate quality and value.
Beazer Homes’ expected earnings growth rate for next year is 14.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. BZH presently has a Zacks Rank #3 (Hold).
Lennar is engaged in homebuilding and financial services in the United States. LEN’s reportable segments consist of Homebuilding, Lennar Financial Services, Rialto and Lennar Multifamily.
Lennar’s expected earnings growth rate for next year is 12.8%. The Zacks Consensus Estimate for current-year earnings has improved 14.8% over the past 60 days. LEN presently carries a Zacks Rank #3.