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3 Housing Stocks to Buy as Home-Builder Confidence Surges
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U.S. homebuilders’ sentiment soared for the second successive month in January. The Housing Market Index of the National Association of Home Builders (“NAHB”), which determines homebuilders’ confidence in newly constructed single-family houses, increased to 44 in January from December’s reading of 37. The reading came in better than the 39 estimated by economists. Also, it’s more than the year-ago reading of 35.
Homebuilders have successfully trimmed prices and provided various other incentives to attract buyers and improve sales. The NAHB reported that nearly 31% of homebuilders cut prices in January. Nonetheless, builders think that the current sales scenario is buoyant, while they are hopeful about forthcoming sales prospects for the first time since August. Builders are, at the moment, witnessing an uptick in traffic among potential buyers.
The decline in mortgage rates since late October has also bolstered homebuilders’ confidence, per Freddie Mac. The 30-year mortgage rate is hovering below the 7% mark and is at its lowest level in three weeks. This decline in mortgage rates lifted home-buying and demand for refinancing. On the other hand, mortgage application volume picked up last week.
Mortgage rates continue to ease on expectations of a series of interest rate cuts this year. This is because mortgage rates always tend to follow the Federal Reserve’s funds rate. Now, with inflationary pressure showing signs of cooling down, the Fed is widely expected to trim interest rates. The CME FedWatch Tool is now showing that 53.8% of market participants are expecting a rate cut in March’s Federal Open Market Committee meeting.
Lest we forget, economic activity in the housing market has already picked up, with construction spending increasing for the 11th month in November. The Commerce Department reported that construction outlays increased 0.4% to $2.04 trillion in November.
Thus, with the housing market warming up, homebuilding and construction stocks such as PulteGroup (PHM - Free Report) , Dream Finders Homes (DFH - Free Report) and Granite Construction (GVA - Free Report) are making compelling investment choices as of now. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup engages in homebuilding and financial services businesses, primarily in the United States. PHM currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-year earnings has moved up 0.6% over the past 60 days. PHM’s expected earnings growth rate for the current year is 6.4%.
Dream Finders Homes is a homebuilding company. It operates principally in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Virginia and Maryland. DFH currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 5.5% over the past 60 days. DFH’s expected earnings growth rate for the next five-year period is 8.6%.
Granite Construction is one of the nation's largest infrastructure contractors and construction materials producers. GVA currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-year earnings has moved up 2.1% over the past 60 days. GVA’s expected earnings growth rate for the current year is 35.1%.
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3 Housing Stocks to Buy as Home-Builder Confidence Surges
U.S. homebuilders’ sentiment soared for the second successive month in January. The Housing Market Index of the National Association of Home Builders (“NAHB”), which determines homebuilders’ confidence in newly constructed single-family houses, increased to 44 in January from December’s reading of 37. The reading came in better than the 39 estimated by economists. Also, it’s more than the year-ago reading of 35.
Homebuilders have successfully trimmed prices and provided various other incentives to attract buyers and improve sales. The NAHB reported that nearly 31% of homebuilders cut prices in January. Nonetheless, builders think that the current sales scenario is buoyant, while they are hopeful about forthcoming sales prospects for the first time since August. Builders are, at the moment, witnessing an uptick in traffic among potential buyers.
The decline in mortgage rates since late October has also bolstered homebuilders’ confidence, per Freddie Mac. The 30-year mortgage rate is hovering below the 7% mark and is at its lowest level in three weeks. This decline in mortgage rates lifted home-buying and demand for refinancing. On the other hand, mortgage application volume picked up last week.
Mortgage rates continue to ease on expectations of a series of interest rate cuts this year. This is because mortgage rates always tend to follow the Federal Reserve’s funds rate. Now, with inflationary pressure showing signs of cooling down, the Fed is widely expected to trim interest rates. The CME FedWatch Tool is now showing that 53.8% of market participants are expecting a rate cut in March’s Federal Open Market Committee meeting.
Lest we forget, economic activity in the housing market has already picked up, with construction spending increasing for the 11th month in November. The Commerce Department reported that construction outlays increased 0.4% to $2.04 trillion in November.
Thus, with the housing market warming up, homebuilding and construction stocks such as PulteGroup (PHM - Free Report) , Dream Finders Homes (DFH - Free Report) and Granite Construction (GVA - Free Report) are making compelling investment choices as of now. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup engages in homebuilding and financial services businesses, primarily in the United States. PHM currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-year earnings has moved up 0.6% over the past 60 days. PHM’s expected earnings growth rate for the current year is 6.4%.
Dream Finders Homes is a homebuilding company. It operates principally in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Virginia and Maryland. DFH currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 5.5% over the past 60 days. DFH’s expected earnings growth rate for the next five-year period is 8.6%.
Granite Construction is one of the nation's largest infrastructure contractors and construction materials producers. GVA currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-year earnings has moved up 2.1% over the past 60 days. GVA’s expected earnings growth rate for the current year is 35.1%.