The recent rise in interest rates has slowed down the housing
recovery. With the recent improvement in economic conditions and
the housing market in general, mortgage rates are edging upwards
to more normalized levels since May. High interest rates dilute
the demand for new homes, as mortgage loans become expensive;
thus lowering a buyer's purchasing power. Accordingly, the sharp
increase in interest rates shocked many customers and a few put
off their purchase decision; thus increasing cancellation rates
and lowering new home orders.
However, though interest rates have started increasing lately,
they are still below historical levels and housing is still
affordable. Thus, historically-low interest rates, accelerating
job growth and increasing consumer confidence are keeping the
demand for new homes steady. Supply, however, remains limited by
low home inventories, both for new and existing ones.
In order to meet this supply shortfall, homebuilders like
The Ryland Group Inc.
) continue to offer new homes/communities.
Recently the company opened a new section called Eastlake at its
high end community Gleannloch Farms. Homes at Eastlake cover an
area of 2,340-3,478 square feet and are priced in the $280,000
range. With easy access to notable cities, these homes come with
a host of amenities including hiking and biking trails, swimming
pools and playgrounds, a golf course, tennis courts, an
equestrian center and a lakeside aquatic center.
Indeed, the company has added a number of new communities to its
portfolio this month. Ryland unveiled new homes at Acacia at
Cypress Village, priced in the mid $400,000 range on Nov 21. In
the same week, the company disclosed new single-family homes at
Windett Ridge in Yorkville, Ill. priced from $170,000 onwards.
Prior to that, the national homebuilder unveiled townhomes at
Somerton Valley in Bensalem, Pa.
These back-to-back openings accompanied with strategic
acquisitions of Charlotte, Dallas, Philadelphia, Phoenix and
Raleigh operations, as well as ongoing land acquisitions in its
existing markets would boost the company's market share while
positioning it for future growth.
Like Ryland, other homebuilding companies are also focusing on
making investments to build new homes. Recently,
) announced the opening of the Arbor Rose community in Arcadia,
an enclave of 34 homes.
The Ryland Group presently has a short-term Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry include
M/I Homes, Inc.
Meritage Homes Corporation
). Both these stocks hold a Zacks Rank #2 (Buy).
KB HOME (KBH): Free Stock Analysis Report
M/I HOMES INC (MHO): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
RYLAND GRP INC (RYL): Free Stock Analysis
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