Previously owned home sales in December grew at the strongest pace since February 2018. The existing home sales that accounts for nearly 90% of the American housing are calculated when the contract closes.
Low interest rates tempted buyers to purchase homes, especially in the second half of 2019.
Existing Home Sales Rise at Best Pace in December
According the National Association of Realtors data on Jan 22, sales of previously owned home rose 3.6% in December from the previous month to an annual rate of 5.54 million. This figure is above the November’s value of 5.35 million and surpassedthe consensus estimate of 5.43 million. Existing home sales is boosted by rush in sales of multi-family housing and single-family homes.
Gains in December were led by 5.7% rise in sales in the Northeast region followed by 2.2% rise in the South. Additionally, second-home buyers purchased 17% of homes in December, up from 15% in December 2018.
Low Interest Rates Tempt Buyers
The U.S. housing market saw an uptick in the second month of 2019, thanks to the Federal Reserve’s three consecutive interest rates cuts from July to September. With interest rates low, mortgage rates remain low, helping consumers to borrow more easily. According to mortgage finance agency Freddie Mac, the 30-year fixed mortgage rate recently dropped to an average of 3.65% from November 2018’s peak of 4.94%.
In fact, Fed’s decision to keep interest rates unchanged throughout 2020 should keep the momentum alive in the housing industry. In fact, mortgage applications went up more than 30% in December and refinance applications increased 109% year over year in 2019.
Earlier this month, the Commerce Department reported that construction of new homes grew by 16.9% at an annual rate of 1.608 million in December, beating the consensus estimate of 1.374 million. Given the low mortgage rates, a 50-year low unemployment rate and an impressive number of American consumers, the U.S. housing space is sure to boom further.
5 Top Picks
Hence, we have shortlisted five stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are poised to return well on investments.
Forestar Group Inc. FOR operates as a real estate lot development company, engaged in acquisition, entitlement, and development of infrastructure for single-family residential communities. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.1% upward over the past 60 days.
Forestar Group flaunts a Zacks Rank #1. You can see
the complete list of today’s Zacks #1 Rank stocks here . The Howard Hughes Corporation HHC owns, manages and develops commercial, residential, and hospitality operating properties in the United States. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 53.3% upward over the past 60 days. The Howard Hughes Corporation carries a Zacks Rank #2. Redfin Corporation ( RDFN Quick Quote RDFN - Free Report) is a Zacks Rank #2 company engaged in the design, construction, and sale of homes that include detached homes and townhomes, and move-up homes.The Zacks Consensus Estimate for the company’s current-year earnings has been revised 6.3% upward over the past 60 days. LGI Homes, Inc. LGIH engages in the design, construction and sale of homes that include detached homes and townhomes, and move-up homes.The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.8% upward over the past 60 days. LGI Homes carries a Zacks Rank #2. CBRE Group, Inc. CBRE is a commercial real estate services and investment company offering integrated property sales, and mortgage and structured financing services. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.4% upward over the past 60 days. CBRE Group carries a Zacks Rank #2. The Hottest Tech Mega-Trend of All
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