Top 5 Stocks To Buy Now On Solid Homebuilder Confidence
Zacks Investment Research | Jan 16, 2019 09:31PM ET
Homebuilders’ confidence increased in January, providing some respite after two months of sharp declines to the lowest level in more than two years. The gradual decline in borrowing costs over the past few weeks along with strong job market has been boosting builders’ sentiment.
Per the National Association of Home Builders or NAHB/Wells Fargo Housing Market Index (HMI), the confidence level of the nation's homebuilders grew two points to 58. Notably, all three HMI components — current sales, future sales and buyer traffic — rose from the prior month. The index measuring current single-family home sales increased two points to 63. Home sales prospects for the next six months grew three points to 64 and buyer traffic surged one point to 44.
Declining Mortgage Rates a Positive
Per Freddie Mac’s Primary Mortgage Market Survey, in the week ending Jan 10, 2019, the fixed rate mortgage average came in at 4.45%, a decline of 6 basis points from Jan 3, 2019. Notably, the said rate was lowest in the past nine months.
Meanwhile, mortgage applications have also been increasing in response to the gradual decline in borrowing costs. As per the recent Mortgage Bankers Association's (“MBA”) weekly Mortgage Applications Survey, applications volume increased 13.5% in the week ending Jan 16, 2019 from one week earlier.
In the words of MBA Senior Vice President and Chief Economist, Mike Fratantoni, "Mortgage applications rose to their strongest level in years last week, with purchase applications rising to the highest since 2010, and refinance applications up to their highest level since last spring,"
Apart from the abovementioned much-needed housing tailwinds, the unemployment rate was 3.9% last month. Unemployment rate was 2 points below the December 2017 level.
The positive momentum that the housing industry is currently experiencing is reflected in its share price performance. The Zacks Zacks Investment Research
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