Builder Confidence Appears Firm: 5 Top Housing Stocks To Buy
Zacks Investment Research | Nov 18, 2019 09:04PM ET
Despite being one point lower in November from a month ago, builders’ sentiments for newly-built single-family homes remained strong, thanks to the much lower mortgage/interest rates and continued job growth.
Notable homebuilders like M.D.C. Holdings, Inc. (NYSE:MDC) , D.R. Horton, Inc. (NYSE:DHI) , Meritage Homes Corporation (NYSE:MTH) , NVR, Inc. (NYSE:NVR) and PulteGroup (NYSE:PHM), Inc. jumped 2.2%, 2.1%, 1.8%, 1.6% and 1.5%, respectively, on Nov 18, following the news.
Let’s Delve Deeper
Per the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), confidence level among builders slipped one point to 70 in November from 20-month high October reading of 71. Notably, the November reading marked the second highest reading since June 2018.
Meanwhile, a gauge of present sales conditions fell two points to 76 from October. Traffic of prospective buyers also dropped one point to 53 but sales predictions for the next six months grew one point to 77.
The three-month moving averages for regional HMI reading were bright for Northeast, West and South. While Northeast reported two-point gain to 62, West increased three points to 81 and South rose one point to 74 from the prior-month figures. However, Midwest remained unchanged at 58.
Solid Prospects of Housing Industry Despite Challenges
The U.S. housing industry’s prospects for the upcoming quarters appear bright, given extremely low mortgage rates, the Fed’s dovish stance, steady economic growth and favorable demographics.
In the recent Primary Mortgage Market Survey report published by Freddie Mac, the 30-year, fixed-rate mortgage average declined to 3.75% from the previous year’s 4.94%, despite increasing six points from a week ago. Mortgage purchase applications for the week ending Nov 8 increased 9.6% from the prior week, per the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey.
This positive momentum that the housing industry is currently experiencing can be substantiated by its share price performance. The Zacks Zacks Investment Research
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