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3 of the Best Housing Stocks You'll Regret Not Buying Sooner
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From homebuilders to manufacturers of building products to home improvement companies, all are part of the home-building sector that has gained considerably so far this year. The iShares U.S. Home Construction ETF (ITB) has soared 31.8% year to date and has easily outperformed the broader S&P 500 Index.
Higher mortgage rates coupled with an increase in raw materials had weakened housing activity last year. However, this year, expectations for lower mortgage rates buoyed the housing market. The average 30-year mortgage rate declined by 13 basis points to 7.11% last week, citing a usnews article.
Last year, in October, housing prices were 38.1% more than they were at the beginning of the coronavirus pandemic in March 2020. However, housing prices started to decline gradually at the end of last year, and experts are of the opinion that prices will fall another 10% to 15% by the end of the second, or third quarter of this year, citing a Yahoofinance article.
For quite some time, elevated inflation led the Federal Reserve to increase interest rates, which certainly made purchasing physical property hard and expensive. But now, market pundits expect the Fed to pause interest rate hikes soon, thanks to inflation showing signs of cooling down.
The CME’s FedWatch Tool indicated that there is nearly a 72% possibility that the central bank may not hike interest rates at this week’s policy meeting. At the same time, many economists estimate the annual rate of increase in consumer prices to drop to 4% in May from April’s 4.9%. Consequently, lower interest rates should unquestionably reduce the cost of owning a house, thereby increasing demand.
Meanwhile, the U.S. Census Bureau added that housing starts in the United States picked up pace regardless of economic headwinds. Housing starts jumped 2.2% in April to a seasonally adjusted annual rate (SAAR) of 1.401 million units, with both single-family starts and multifamily starts ticking up. Simultaneously, sales of single-family homes in the United States climbed to a 13-month high in April. New home sales climbed 4.1% to a SAAR of 683,000 units in April, the highest level since March 2022.
Most importantly, U.S. homebuilder sentiment touched a 10-month high in May, a tell-tale sign that there has been an uptick in both sales and potential buyers in the housing market. In May, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) advanced five points to a reading of 50, for the first time since July 2022.
Given such positives, it is sensible to place bets on solid housing stocks like Beazer Homes USA (BZH - Free Report) , Lennar (LEN - Free Report) and Toll Brothers (TOL - Free Report) , which are well positioned to scale northward as the home builder sector gets stronger.
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.
Beazer Homes USA, designs, builds and sells single-family homes. 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 almost 11% over the past 60 days. BZH’s expected earnings growth rate for the next year is 7.6%.
Lennar is engaged in homebuilding and financial services in the United States. 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 0.7% over the past 60 days. LEN’s expected earnings growth rate for the next year is 7.4%.
Toll Brothers builds single-family detached and attached home communities. The company, currently, sports a Zacks Rank #1 and a VGM Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 19.6% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%.
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3 of the Best Housing Stocks You'll Regret Not Buying Sooner
From homebuilders to manufacturers of building products to home improvement companies, all are part of the home-building sector that has gained considerably so far this year. The iShares U.S. Home Construction ETF (ITB) has soared 31.8% year to date and has easily outperformed the broader S&P 500 Index.
Higher mortgage rates coupled with an increase in raw materials had weakened housing activity last year. However, this year, expectations for lower mortgage rates buoyed the housing market. The average 30-year mortgage rate declined by 13 basis points to 7.11% last week, citing a usnews article.
Last year, in October, housing prices were 38.1% more than they were at the beginning of the coronavirus pandemic in March 2020. However, housing prices started to decline gradually at the end of last year, and experts are of the opinion that prices will fall another 10% to 15% by the end of the second, or third quarter of this year, citing a Yahoofinance article.
For quite some time, elevated inflation led the Federal Reserve to increase interest rates, which certainly made purchasing physical property hard and expensive. But now, market pundits expect the Fed to pause interest rate hikes soon, thanks to inflation showing signs of cooling down.
The CME’s FedWatch Tool indicated that there is nearly a 72% possibility that the central bank may not hike interest rates at this week’s policy meeting. At the same time, many economists estimate the annual rate of increase in consumer prices to drop to 4% in May from April’s 4.9%. Consequently, lower interest rates should unquestionably reduce the cost of owning a house, thereby increasing demand.
Meanwhile, the U.S. Census Bureau added that housing starts in the United States picked up pace regardless of economic headwinds. Housing starts jumped 2.2% in April to a seasonally adjusted annual rate (SAAR) of 1.401 million units, with both single-family starts and multifamily starts ticking up. Simultaneously, sales of single-family homes in the United States climbed to a 13-month high in April. New home sales climbed 4.1% to a SAAR of 683,000 units in April, the highest level since March 2022.
Most importantly, U.S. homebuilder sentiment touched a 10-month high in May, a tell-tale sign that there has been an uptick in both sales and potential buyers in the housing market. In May, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) advanced five points to a reading of 50, for the first time since July 2022.
Given such positives, it is sensible to place bets on solid housing stocks like Beazer Homes USA (BZH - Free Report) , Lennar (LEN - Free Report) and Toll Brothers (TOL - Free Report) , which are well positioned to scale northward as the home builder sector gets stronger.
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.
Beazer Homes USA, designs, builds and sells single-family homes. 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 almost 11% over the past 60 days. BZH’s expected earnings growth rate for the next year is 7.6%.
Lennar is engaged in homebuilding and financial services in the United States. 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 0.7% over the past 60 days. LEN’s expected earnings growth rate for the next year is 7.4%.
Toll Brothers builds single-family detached and attached home communities. The company, currently, sports a Zacks Rank #1 and a VGM Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 19.6% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%.