The Housing Market’s Comeback

Reasons for the Market’s Strength

The US housing market has rebounded after a downturn in March and April. Home sale volume last week was 13.7% higher than it was during the week ending March 13, when lockdown measures went into effect in many parts of the country. This recovery could be due to several factors.

Homebuyers currently have access to credit and low interest rates. In addition, some people are seeing the appeal of more living space after quarantining. Single-family homes are being viewed as the best way to social distance as COVID-19 continues to spread. The housing market has also adapted to new circumstances and has implemented ways to help buyers view homes virtually.

Builder Stocks to Watch

New home sales fell 25% between February and April this year. However in May, they were up 16.6% to reach a seasonally adjusted rate of 676,000.

Analysts believe that this uptick in demand for new homes could benefit builder stocks. Some companies to watch are Builders FirstSource (BLDR), D.R. Horton (DHI), Lennar Corporation (LEN), Taylor Morrison (TMHC), and Toll Brothers (TOL).

Looking Ahead

The housing market’s rebound comes as a relief for many. However, some are wary that the uptick in demand for houses may not last. A second wave of COVID-19, the end of the Paycheck Protection Program, and the 2020 election could all cause change in the housing market.

Homeowners, prospective buyers, lenders, and investors, can stay on top of changing conditions by watching a few key data points. Analysts recommend keeping an eye on the volume of new home listings, following which price ranges of houses are moving, and looking at state-level information about housing inventory, as opposed to just nation-wide or neighborhood-specific information.

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