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3 Residential Construction Stocks to Avoid as Sales of New Homes Drop

Stock Markets Jul 30, 2021 11:30AM ET
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© Reuters. 3 Residential Construction Stocks to Avoid as Sales of New Homes Drop
 
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Housing has been one of the strongest parts of the economy but its momentum is beginning to slow as homebuilders grapple with rising prices and slowing demand. Below, we provide a look at three residential construction stocks investors should avoid as the housing market begins to cool. Those stocks are as follows: Toll Brothers (NYSE:TOL), NVR (NYSE:NVR), and D.R. Horton (DHI).0.The housing market is cooling off as demand falls with rising prices. This is not surprising based on recent earnings report from homebuilders.

Sales of new homes in the United States declined in June, dropping down to the lowest level since the initial month of the ongoing pandemic. It is clear many of those interested in buying a home are now willing to wait out the market. It is quite possible the end to the nationwide eviction ban and the mandatory resumption of mortgage payments will move the pendulum back in favor of homebuyers.

The plain truth of the matter is home prices increased much too quickly, largely because so few homes were on the market this past year. If the pandemic ends at some point in the second half of 2021, homeowners will feel more comfortable selling, ultimately bringing the housing market back to equilibrium. Below, we provide a look at three residential construction stocks investors should avoid as the housing market begins to cool. Those stocks are as follows: Toll Brothers (TOL), NVR (NVR), and D.R. Horton (DHI).

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3 Residential Construction Stocks to Avoid as Sales of New Homes Drop
 

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