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Will Housing & Construction Related Stocks Surge This Summer?
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With summer considered the prime season for construction, investors may be wondering if it’s time to buy stocks that offer exposure to the housing market.
To that point, homebuilder stocks are usually of interest, along with home improvement retailers such as Home Depot (HD - Free Report) , which reported mixed Q1 results on Tuesday.
Furthermore, spring and early summer are generally peak seasons for homebuying as more homes are listed for sale, giving buyers a wider selection to choose from. According to Zillow (Z - Free Report) , late summer can offer better deals, as sellers may start lowering prices before the fall.
However, while the summer is often the busiest time for homebuilders as well, high demand can drive up material costs. Of course, higher tariffs will also have an adverse effect in regard to rising material costs.
This makes it a worthy topic, of which housing and construction-related stocks are worthy of investors' consideration as the summer approaches.
Home Depot’s Q1 Results
Optimistically, Home Depot should be able to avoid a significant impact from tariffs, highlighting in its Q1 report that more than 50% of the company’s supply purchases are sourced from the United States. Having a favorable global sourcing strategy, Home Depot’s Q1 sales were up 9% year over year to $39.85 billion and topped estimates of $39.4 billion.
That said, Q1 EPS of $3.56 dipped from $3.63 in the prior period and missed expectations of $3.59 per share. Still, Home Depot reaffirmed its fiscal 2025 guidance, expecting total sales growth of approximately 2.8%, which is roughly in line with Zacks' estimates (Current Year below). Based on Zacks' projections, Home Depot’s total sales are forecasted to rise another 4% in FY26 to $171.4 billion.
Home Depot stock currently lands a Zacks Rank #3 (Hold) and should remain a viable long-term investment going into the peak home improvement season, although better buying opportunities could still be ahead following the Q1 earnings miss.
Image Source: Zacks Investment Research
Zillow’s Outlook on the Housing Market
Notably, Zillow’s latest home value and sales report from April suggests a mix of growth and challenges in the housing market. Zillow’s latest forecast calls for home values to decrease by 1.9% this year from previous estimates of -0.6%, although existing home sales are expected to increase 3.3% to 4.2 million in 2025.
Newly pending listing sales in April fell 2.5% from a year ago, despite lower average mortgage rates. New home listings did rise 7.6%, with Zillow stating sellers are more enthusiastic. Unfortunately, Zillow stock has a Zacks Rank #4 (Sell) based on a trend of declining earnings estimate revisions (EPS) over the last 60 days. Also, the volatility in mortgage rates will be something to keep an eye on, with Zillow expecting the average fixed 30-year rate to settle near 6.5% by year-end.
Image Source: Federal Reserve Economic Data
Buy Rated Stocks
Among homebuilders, Dream Finders Homes (DFH - Free Report) stock is standing out with a Zacks Rank #2 (Buy). While many homebuilders are struggling to meet their lofty growth expectations, the risk-to-reward looks favorable to invest in Dream Finders with DFH trading at $22 a share and just 7X forward earnings. Dream Finders' annual earnings are expected to dip 3% this year but are projected to rebound and rise 8% in FY26 to $3.49 per share, with single-digit sales growth on the horizon.
Image Source: Zacks Investment Research
Comfort Systems USA (FIX - Free Report) and AAON Inc. (AAON - Free Report) are worthy of consideration as providers and manufacturers of comprehensive heating and air conditioning systems. With the warmer months approaching, both sport a Zacks Rank #2 (Buy) and are expected to post considerable top and bottom-line growth in FY25 and FY26. Similarly, Limbach (LMB - Free Report) is very intriguing as a provider of building systems and currently boasts a Zacks Rank #1 (Strong Buy) as EPS estimates have soared in the last two months. Limbach constructs and services mechanical, plumbing, air conditioning, electrical, and control systems.
Thanks to their stellar expansion, Limbach, Comfort Systems, and AAON’s stock have been three of the market’s top performers in recent years, with LMB skyrocketing over +2000% in the last three years and FIX and AAON sitting on gains of more than +400% and +200%, respectively.
Image Source: Zacks Investment Research
Bottom Line
For now, many of the renowned homebuilder stocks aren’t as appealing even with peak construction season approaching, but there is still an abundance of opportunity in the broader housing market, with air conditioning and building systems providers standing out in particular.
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Will Housing & Construction Related Stocks Surge This Summer?
With summer considered the prime season for construction, investors may be wondering if it’s time to buy stocks that offer exposure to the housing market.
To that point, homebuilder stocks are usually of interest, along with home improvement retailers such as Home Depot (HD - Free Report) , which reported mixed Q1 results on Tuesday.
Furthermore, spring and early summer are generally peak seasons for homebuying as more homes are listed for sale, giving buyers a wider selection to choose from. According to Zillow (Z - Free Report) , late summer can offer better deals, as sellers may start lowering prices before the fall.
However, while the summer is often the busiest time for homebuilders as well, high demand can drive up material costs. Of course, higher tariffs will also have an adverse effect in regard to rising material costs.
This makes it a worthy topic, of which housing and construction-related stocks are worthy of investors' consideration as the summer approaches.
Home Depot’s Q1 Results
Optimistically, Home Depot should be able to avoid a significant impact from tariffs, highlighting in its Q1 report that more than 50% of the company’s supply purchases are sourced from the United States. Having a favorable global sourcing strategy, Home Depot’s Q1 sales were up 9% year over year to $39.85 billion and topped estimates of $39.4 billion.
That said, Q1 EPS of $3.56 dipped from $3.63 in the prior period and missed expectations of $3.59 per share. Still, Home Depot reaffirmed its fiscal 2025 guidance, expecting total sales growth of approximately 2.8%, which is roughly in line with Zacks' estimates (Current Year below). Based on Zacks' projections, Home Depot’s total sales are forecasted to rise another 4% in FY26 to $171.4 billion.
Home Depot stock currently lands a Zacks Rank #3 (Hold) and should remain a viable long-term investment going into the peak home improvement season, although better buying opportunities could still be ahead following the Q1 earnings miss.
Image Source: Zacks Investment Research
Zillow’s Outlook on the Housing Market
Notably, Zillow’s latest home value and sales report from April suggests a mix of growth and challenges in the housing market. Zillow’s latest forecast calls for home values to decrease by 1.9% this year from previous estimates of -0.6%, although existing home sales are expected to increase 3.3% to 4.2 million in 2025.
Newly pending listing sales in April fell 2.5% from a year ago, despite lower average mortgage rates. New home listings did rise 7.6%, with Zillow stating sellers are more enthusiastic. Unfortunately, Zillow stock has a Zacks Rank #4 (Sell) based on a trend of declining earnings estimate revisions (EPS) over the last 60 days. Also, the volatility in mortgage rates will be something to keep an eye on, with Zillow expecting the average fixed 30-year rate to settle near 6.5% by year-end.
Image Source: Federal Reserve Economic Data
Buy Rated Stocks
Among homebuilders, Dream Finders Homes (DFH - Free Report) stock is standing out with a Zacks Rank #2 (Buy). While many homebuilders are struggling to meet their lofty growth expectations, the risk-to-reward looks favorable to invest in Dream Finders with DFH trading at $22 a share and just 7X forward earnings. Dream Finders' annual earnings are expected to dip 3% this year but are projected to rebound and rise 8% in FY26 to $3.49 per share, with single-digit sales growth on the horizon.
Image Source: Zacks Investment Research
Comfort Systems USA (FIX - Free Report) and AAON Inc. (AAON - Free Report) are worthy of consideration as providers and manufacturers of comprehensive heating and air conditioning systems. With the warmer months approaching, both sport a Zacks Rank #2 (Buy) and are expected to post considerable top and bottom-line growth in FY25 and FY26. Similarly, Limbach (LMB - Free Report) is very intriguing as a provider of building systems and currently boasts a Zacks Rank #1 (Strong Buy) as EPS estimates have soared in the last two months. Limbach constructs and services mechanical, plumbing, air conditioning, electrical, and control systems.
Thanks to their stellar expansion, Limbach, Comfort Systems, and AAON’s stock have been three of the market’s top performers in recent years, with LMB skyrocketing over +2000% in the last three years and FIX and AAON sitting on gains of more than +400% and +200%, respectively.
Image Source: Zacks Investment Research
Bottom Line
For now, many of the renowned homebuilder stocks aren’t as appealing even with peak construction season approaching, but there is still an abundance of opportunity in the broader housing market, with air conditioning and building systems providers standing out in particular.