Stock Entry Point Article​

Want Alpha? Buy Home Builder Stocks

Investors looking for returns that comfortably beat the market should look at home builder stocks. Home building may not sound as glamorous as technology or healthcare (which seems to be in flavor at this moment), however, it has given some solid returns since the market crashed back in March.

Home sales are improving

Home builder stocks have been among the top real estate stocks lately because home sales seem to be picking up. July existing home sales were up a robust 24.7% at 5.86 million units. The same figure for July 2019 was 5.38 million units. The month of July kept up the sales momentum as June had also recorded an increase of 20.7%. The median existing home price was also up 8.5% at $304,100. The median price in July 2019 was $280,400. The price increase marks 101 consecutive months of year-on-year gains. It was also the first time that the national median home price broke the $300,000 level.

Emerging from the pandemic

Home sales have now crossed the pre-pandemic levels. The phenomenon of work-from-home has also led current homeowners to look for larger homes. National Association of Realtors’ chief economist Lawrence Yun said, “The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days.” He further added, “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.” These trends mean that it may be time to look at home builder stocks.

Best Real Estate Stocks 2020 are all up more than 100%

Homebuilders like Pulte Group (NYSE: PHM), D.R. Horton (NYSE: DHI), Toll Brothers (NYSE: TOL), KB Home (NYSE: KBH), and Lennar (NYSE: LEN) are among the best homebuilding stocks right now. Pulte stock is up 150% since March 23rd. D.R. Horton is up 135%, Toll Brothers is up an incredible 213%, KB Home is up 217%, and Lennar is up 157% during the same period. All of these stocks have comfortably beaten the S&P500, which has risen 49% since March 23rd.


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