If you are looking for the best real estate stocks to invest in today, then you might want to consider homebuilder companies. New-home sales in the US have surprisingly hit a 13-year high in June 2020 even as the pandemic continues to disrupt the economy. Purchases of new homes grew 13.8% to 776,000. According to Ian Shepherdson, Chief Economist, Pantheon Macroeconomics, “Expect homebuilders’ sentiment and housing construction activity to rebound further.”
Among the best home builder stocks 2020 are Pulte Group (NYSE: PHM), D.R. Horton (NYSE: DHI), Toll Brothers (NYSE: TOL), KB Home (NYSE: KBH), and Lennar (NYSE: LEN). Since the March market crash, Pulte Group has gone up by 140%, D.R. Horton has gone up by 121%, Toll Brothers has gone up by 169%, KB Home has gone up by 192%, and Lennar has gone up by 137%. These returns compare with the S&P500’s 43% growth during the same period.
Such outsized gains make these companies the best home builder stocks right now. According to a Bank of America report, the pandemic has affected lower-income workers disproportionately as compared to high-income earners. The National Association of Realtors estimates the median income of a new home buyer at $93,000. It could be one reason why home prices have held up and home sales numbers have been strong.
Another factor working in favor of the best homebuilder stocks to buy now is the historically low interest rates. 30-year mortgages can be availed at 2.98%, which makes mortgages relatively cheap. Additionally, there has been a shift from high-population urban areas to more “safer” destinations as work-from-home gains pace. A substantial number of renters are likely to become homeowners. These developments are slated to further drive the homebuilding business.