9/21/2023 0 Comments Housing bubble 2021 usaOur theme of Housing Stocks which includes the stocks of home builders, building products companies, and home improvement players, is up 21% year-to-date, ahead of the S&P 500 which is up by about 15% over the same period. Are The Cracks Beginning To Show In The Housing Market? On the other side, Installed Building Products (IBP) has been a relative laggard, with its stock up by 16% year-to-date. Horton (DHI) has been the strongest performer, with its stock up by about 36% year-to-date. Moreover, builders have been contending with shortages and surging prices for building materials, land, and labor and this could also put pressure on margins to an extent. Soaring prices are also likely to make homes increasingly out of reach for many people. With high levels of vaccine coverage, companies could start calling workers back to offices in cities later this year and this could impact demand for homes in the suburbs. That being said, there are concerns as well. Separately, new home construction activity in June also picked up, with the seasonally adjusted annual rate of housing starts up 6.3% from May and by almost 30% compared to last year. While revenues rose by 35.4% year-over-year to $7.3 billion, EPS rose by 78%. Horton, one of the largest homebuilders published a stronger-than-expected set of Q3 FY’21 earnings, indicating that things were continuing to go well for the sector. While the outperformance comes on the back of a surge in demand for more spacious homes in the suburbs through Covid-19 and low mortgage rates, there have been some other recent positive developments for the industry.
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