The U.S. homebuilding market has been rock solid despite coronavirus battering most other industries over the past year and a half. Although homebuilding actively somewhat slowed down during the earlier part of the year, it still has enough steam. This is being proved every month as more people flock to the market to buy new homes.
Housing starts and building permits increased in August, reflecting that homebuilding activity is in full swing in the United States. Although rising prices and low inventory have been concerns for the homebuilding market lately, it hasn’t stopped people from hunting for new homes.
Housing Starts, Building Permits Increase
The Commerce Department said on Wednesday that homebuilding activity increased at a solid pace in August. The report said that housing starts increased an impressive 3.9% to a seasonally adjusted annual rate of 1.615 million units in August. This was higher than economists’ expectations of 1.555 million units.
Also, July’s data was revised up to a rate of 1.554 million units from 1.534 million units reported earlier. Permits for buildings increased 6% in August, marking the biggest gain since January. This reflects an impressive jump in multi-family homes. Also, permit applications for single-family homes increased in August.
Housing starts have somewhat slowed down since reaching multi-year highs in March. This is because of the rising prices of materials and labor. At the same time, land availability too has been a challenge. However, even then builders are making new homes, as demand continues to be high.
Homebuilding Market on a High
The homebuilding market did exceedingly well during the peak of the pandemic. Many wanted to leave densely populated cities and move to suburbs, prompting an increase in new home sales. Besides, record low interest rates helped people buy homes at cheaper prices.
The mortgage rates started increasing with the turn of the year. Also, raw materials and labor costs escalated, which somewhat slowed down the housing market. In spite of that, the homebuilding market has been doing well as higher demand for homes continues.
According to the Census Bureau and Department of Housing and Urban Development, new home sales increased 1% in July at a seasonally adjusted annual rate of 708,000. Besides, existing home sales increased 2% in July.
There were already a few homes compared to the high demand before the pandemic, and now fewer homeowners are willing to list their homes for sale. This is further helping to boost home prices and the trend is likely to continue in the days to come.
The homebuilding market is still going strong despite rising prices and demand for homes is going to continue through 2021. This thus makes for an opportune time to invest in homebuilding stocks.
Century Communities, Inc. CCS is a home building and construction company. Its activities comprise land acquisition, development, and entitlements; and the acquisition, development, construction, marketing, and sale of various single-family detached and attached residential home projects.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the past 60 days. Century Communities carries a Zacks Rank #2.
Meritage Homes Corporation MTH primarily engages in building and selling single-family homes for entry-level, first-time, move-up, luxury, and active-adult buyers in the historically high-growth regions of the United States.
The company’s expected earnings growth rate for the current year is 72.4%. The Zacks Consensus Estimate for current-year earnings has improved 28.9% over the past 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
MI Homes, Inc. MHO is one of the nation's leading builders of single-family homes. It serves a broad segment of the housing market, including first-time, move-up, luxury, and empty-nester buyers.
The company’s expected earnings growth rate for the current year is 63.3%. The Zacks Consensus Estimate for current-year earnings has improved 32.5% over the past 60 days. The company sports a Zacks Rank #1.
TRI Pointe Group, Inc. TPH is involved in the design, construction, and sale of single-family homes. The company's operating portfolio includes Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia.
The company’s expected earnings growth rate for the current year is 66.8%. The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the past 60 days. TRI Pointe has a Zacks Rank #2.
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