Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Buy 3 Housing Stocks As New Home Sales Increase

By Zacks Investment ResearchStock MarketsFeb 26, 2020 08:37PM ET
www.investing.com/analysis/buy-3-housing-stocks-as-new-home-sales-increase-200511290
Buy 3 Housing Stocks As New Home Sales Increase
By Zacks Investment Research   |  Feb 26, 2020 08:37PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The American housing market is bustling with activity, courtesy of significantly lower mortgage rates, which were a result of the Fed’s dovish stance. As sales of new homes rise and more building permits are issued, one can only expect this ramped-up activity to continue growing.

In such a scenario, instead of just focusing on homebuilding stocks, one could also pay attention to other stocks that are closely tied to a new home. Let’s take a look.

New Home Sales Highest Since 2007

The housing market’s strength is evident in January’s new U.S. single-family home sales, which are at a 12.5-year high. This very strength could keep the U.S. economy going through the longest bull market in history amid fears of the new epidemic. Although housing accounts for nearly 3.1% of the U.S. gross domestic product, it leaves a significant impact on the economy.

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development on Feb 26, new home sales rose 7.9% from December’s revised rateof 708,000 to a seasonally adjusted annual rate of 764,000 units in January, touching the highest level since July 2007.

Given that mortgage rates are already low, new home sales could inch further up ahead. After all, building permits for privately-owned housing units also hit a 13-year high in January (rising 9.2%) and housing starts declined lower than expected in the same month. These factors further confirm the housing market’s strength.

Mortgage Rates at Eight-Year Low

A major factor that is boosting the sale of new homes is the sinking mortgage rates. Per Mortgage News Daily, the popular 30-year fixed mortgage rate dropped to an eight-year low of 3.34% on Feb 24.

It reflects the impact of coronavirus fears on mortgage rates. After all, the epidemic woes massively affected the financial markets, pulling down the U.S. bond yields.

Since mortgage rates loosely follow the 10-year Treasury yield, it sent the rates down to an eight-year low. Of course, the Fed’s three interest rate cuts last year also sent mortgage rates plunging, thereby surging in activities within the housing market.

These Companies May Expect to Benefit: Here’s Why

Given the growth curve in new home sales, one may expect a surge in consumer expenditures on household products, such as furniture, appliances and interior-building products, etc. After all, these are the necessary goods for making a newly-finished home habitable. This is why one may take a close look at the industries that offer such products.

3 Stocks in a Sweet Spot

We therefore hand-picked three stocks that are well-positioned to gain from the housing market strength. All carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).

La-Z-Boy Incorporated (NYSE:LZB) is a manufacturer and marketer of furniture, accessories and casegoods furniture products etc. The Zacks Consensus Estimate for La-Z-Boy’s current-year earnings has moved 4.4% north in the past 60 days. La-Z-Boy, which belongs to the Zacks Furniture industry, sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Builders FirstSource, Inc. (NASDAQ:BLDR) is a manufacturer and supplier of building materials, manufactured components and construction services to homebuilders, consumers and remodelers alike.

The Zacks Consensus Estimate for Builders FirstSource’s current-year earnings has moved 3.2% north in the past 60 days. Builders FirstSource, which belongs to the Zacks Building Products - Retail industry, carries a Zacks Rank #2.

BMC Stock Holdings, Inc. (NASDAQ:BMCH) is a distributor of lumber and building materials to new construction, repair and remodeling contractors.The Zacks Consensus Estimate for BMC Stock’s current-year earnings has moved 0.5% north in the past 60 days. BMC Stock, which belongs to the Zacks Building Products - Retail industry, carries a Zacks Rank #2.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>



La-Z-Boy Incorporated (LZB): Free Stock Analysis Report

Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report

BMC Stock Holdings, Inc. (BMCH): Free Stock Analysis Report

Original post
Buy 3 Housing Stocks As New Home Sales Increase
 

Related Articles

Buy 3 Housing Stocks As New Home Sales Increase

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email