3 Best Homebuilder Stocks To Invest In: What To Know as the Fed Plans Interest Rate Cuts for 2024
Written by
Gina Hagler
Edited by
Maria Concepcion
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In 2024, the Federal Reserve intends to cut its key interest rate three times, forecasting a slow but steady decline in inflation alongside growth in the job market and economy. These rate cuts would result in lower mortgage, auto and business loan costs when people are particularly frustrated by high prices that haven’t returned to pre-pandemic levels. While the economy is seeing improvements in employment and the stock market, an area of concern in the US is the housing shortage, where supply cannot meet demand, and home prices haven’t dropped much despite the lower home sales during the pandemic. Given the upcoming interest rate cuts, you’ll want to know the best homebuilder stocks to buy this year.
D.R. Horton (DHI)
D.R. Horton (DHI) is the largest US homebuilder by volume and has good liquidity. Their performance in Q1 2024 has been positive, with a net income of $947.4 million or $2.42 per share. New home orders increased 35% to 18,069, and their total revenue was $7.7 billion.
Lennar Corp (LEN)
As the second-largest homebuilding company, Lennar Corp (LEN) is also doing well, having outpaced the S&P 500 during the last five years, and this is only projected to continue. During Q4 2023, they saw net earnings of $1.4 billion, a per-share value of $4.82, a 32% increase to 17,366 new home orders, and a total revenue of $11 billion.
PulteGroup (PHM)
During Q4 2023, PulteGroup (PHM) had a net income of $3.28 per share, and a 57% increase in new orders, to 6,214 homes. Not only that, but they also recently announced a $1.5 billion to $1.8 billion increase in their share repurchase authorization. In the last decade, they’ve returned over $7 billion to shareholders in dividends and share repurchases. It’s not a guarantee for the future, but it bodes well for future shareholders.
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