Mortgage Rates Lowest In A Year: Top 4 Housing Picks
Zacks Investment Research | Mar 21, 2019 09:33PM ET
The U.S. housing market started building up strength since the beginning of 2019, after a torrid second half of 2018. Declining mortgage rates and moderate home prices are likely to bring about a busy spring selling season for the industry.
Per mortgage finance company Freddie Mac’s Primary Mortgage Survey, the average U.S. 30-year fixed-rate mortgage slipped to the lowest level in a year to 4.28% for the week ended Mar 21 from 4.31% recorded a week ago. The said figure was also lower than the year-ago 4.45%.
The 15-year fixed-rate mortgage averaged 3.71%, down five basis points from 3.76% in the week earlier, while the five-year adjustable-rate mortgage was nearly flat at 3.84%. The decline is a welcome sign for potential buyers, who have been suffering affordability issues owing to rising rates and home prices.
Meanwhile, shares of notable homebuilding companies like Meritage Homes Corporation (NYSE:MTH) , Beazer Homes USA, Inc. (NYSE:BZH) , KB Home (NYSE:KBH) , D.R. Horton, Inc. (NYSE:DHI) and Lennar Corporation (NYSE:LEN) rose 3.4%, 3%, 2.7%, 3.4% and 2.9%, respectively, on Mar 21.
Mortgage Applications Rise for 3rd Straight Week
According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey, mortgage applications for new home purchases increased 1.6% from the prior week on a seasonally adjusted basis, for the week ended Mar 15. Moreover, volumes are 1.8% higher than the year-ago level.
The rise mainly came from rate-sensitive refinance volume. Refinance applications rose 4% in the week and were 3.5% higher than a year ago.
Strengthening Housing Fundamentals
Strong confidence was noticed among homebuilders in the months of January and February for newly-built single-family homes, while the same remained stable in March, per the National Association of Home Builders/Wells Fargo sentiment index.
Further, total housing starts increased 18.6% in January from a month ago, per the U.S. Housing and Urban Development and Commerce Department. Additionally, low unemployment, solid job growth, wage gains and favorable demographics are likely to drive demand for homes in the upcoming season as well.
4 Must-Buy Housing Stocks
Adding some housing stocks to your portfolio looks like a smart move at this point as there are plenty of reasons to be optimistic about the sector over the short and long term. However, picking winning stocks may be difficult.
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