Returns on homebuilder stocks of companies like Lennar and D.R. Horton outperformed even the S&P 500 in the past decade. However, Wall Street analysts began downgrading homebuilder stock prices this summer. Citi cites concerns about projections that Lennar and D.R. Horton stocks will likely slow towards year-end.
Nonetheless, some homebuilder stock investors remain resolute, sticking to their guns and looking forward to an uptick soon.
The November presidential elections are approaching, and the two contenders are proposing different housing reforms that will likely transform the industry. For example, Vice President Kamala Harris is proposing a relaxation of zoning laws to allow a faster pace of home construction activities. However, former President Donald Trump has criticized the Blues’ initiative to encourage the construction of dense housing structures in suburban areas.
Either way, the pendulum swings, and we are sure the election outcomes will influence the performance of homebuilder stock prices and homebuilder stocks ETFs.
The Housing Deficit Crisis and the US Economy
Industry observers suggest that top homebuilders have made a massive rebound since the 2008 financial crisis, giving credence to the performance of homebuilder stocks in the last decade.
According to Luis Quintero, a faculty member at the Cary School of Business at Johns Hopkins University, several home builders received stimulus packages starting in early 2010. Many of these companies deployed their liquidity boost in the way they know best, and if nothing, they made their homebuilder stock price go through the roof.
However, Quintero affirms that irrespective of all the cash stimulus, homebuilders in the US are not competitive. He believes that this lack of competition is the primary cause of housing shortages in the US.
Since the advent of rising inflation, housing prices have continued on an upward trend. So, industry experts suggest homebuilders are the key to the puzzle. Many recommend building millions of new homes to nip the biting home deficit.
The American Enterprise Housing Center pegs the figure of housing unit deficits at between 2 million to 8 million. However, some experts familiar with the housing and homebuilding market say regulatory red tape is responsible for the slow pace of home development in the US. This school of thought suggests that restrictive zoning and the long permit approval process stall homebuilders in their stride.
Democratic Harris boldly declared during her campaign outings that her administration would unbundle housing zoning laws. In addition, she is looking to subsidize the activities of homebuilders to facilitate the construction of at least 3 million new homes by the end of the next administration.
Trump, in contrast, is unrelenting in pointing out that the Democratic administration toppled the domino that caused rising inflation. For example, he calls attention to the inability of young adults to finance a house due to soaring costs.
ALSO READ: Lowe’s and Home Depot Face Challenges Due to the Slumping Housing Market
Which Homebuilder Stock is Best?
According to InvestorPlace, a popular brokerage review platform, D.R. Horton has retained its place as the housing company with the best homebuilder stocks in 2024. Despite the slow pace of the housing market, thanks to high mortgage rates, D.R. Horton still managed to pull off a 35% year-on-year increase in home sales, which resulted in a 6% increase in annual revenue to $7.7 billion.
What Company is the Largest Homebuilder in the US?
Judging by 2023 revenue, Probuilder ranks D.R. Horton as the largest homebuilder in the United States. The company made about $34,681,500,000 in the 2023 fiscal year.
The National Association of Home Builders ratified the ranking by Probuilder.
Who is the Richest Home Builder?
Diane Hendricks is not explicitly in the homebuilder trade per se. However, she is acclaimed to be the wealthiest person in the construction and engineering industry.
Hendricks is the widow of late businessman Ken Hendricks and is worth an estimated $20.9 billion.
What Are the Top 3 Stocks To Invest In?
According to Benzinga, the following are three of the best homebuilder stocks in the U.S. housing market.
D.R. Horton (NYSE: DHI)
D.R. Horton is a leading homebuilder in the US, with coverage in some 31 States and operations in about 98 markets. An inside analyst pointed out that D.R. Horton’s stock price was $70 in 2022. Interestingly, that same stock traded for $187.57 and is still in the greens.
There are indications that D.R. Horton’s stocks have the potential to grow in the future as it specializes in the development of single-family detached homes.
ALSO READ: 12 U.S. Cities Where Home Ownership Costs Less Than Renting
PulteGroup (NYSE:PHM)
PulteGroup offers homebuilder stocks currently valued at $131.11 per unit. Though that value is lower than recent highs, the PHM stock is a promising prospect.
The PulteGroup operates in 23 States and across 40 markets.
NVR (NYSE: NVR)
In the last week of August, a unit of NVR stock opened on the NYSE for $9,070. NVR’s top performance is indicated by its average daily sales of 35,000 units. NVR operates in 14 States and 31 metropolitan areas.
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