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The Zacks Analyst Blog Highlights: William Lyon, D.R. Horton, Lennar and Meritage Homes


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For Immediate Release

Chicago, IL -June 10, 2019 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: William Lyon Homes WLH , D.R. Horton, Inc. DHI and Lennar Corp. LEN and Meritage Homes Corp. MTH .

Here are highlights from Friday's Analyst Blog:

Homebuilders Gain as Mortgage Rates Fall to Two-Year Low

Per Freddie Mac's latest Primary Mortgage Market Survey, the average U.S. 30-year fixed-rate mortgage for the week ended Jun 6 declined 17 basis points (bps) to 3.82% from a week ago, marking the lowest rate since September 2017 and the sixth consecutive weekly decline. The metric also declined 720 bps from 4.54% recorded in the corresponding prior-year period.

The 15-year fixed-rate mortgage during the week averaged 3.28%, down 18 bps from 3.46% in the prior week, while five-year adjustable-rate mortgage declined 8 bps to 3.52%.

Following the release of the data, on Jun 6, notable homebuilding companies like William Lyon Homes, D.R. Horton, Inc. and Lennar Corp. gained 3.4%, 1.2% and 1.1%, respectively.

Since January 2019, the homebuilding market has shown signs of recovery after a disappointing second half of 2018. The recovery can be attributed to declining mortgage rates, which reduced the pocket pinch for homebuyers.

Notably, shares of prominent homebuilders like Meritage Homes Corp. and NVR, Inc. have gained 39.2% and 37.9%, respectively, in the year-to-date period. The Zacks Building Products - Home Builders industry has rallied 29.4% in the same period.

Will Lower Rates Aid Housing Industry to Rebound?

For the week ended May 31, 2019, mortgage applications for new home purchases increased 1.5% from the prior week on a seasonally adjusted basis, according to the Mortgage Bankers Association's ("MBA") Weekly Mortgage Applications Survey. The Refinance Index jumped 6% during the week.

Sam Khater, Freddie Mac's chief economist, said, "While the drop in mortgage rates is a good opportunity for consumers to save on their mortgage payment, our research indicates that there can be a wide dispersion among mortgage rate offers. By shopping around and getting a single additional mortgage rate quote, a borrower can save an average of $1,500."

This data clearly suggests that declining mortgage rates are providing relief to potential home buyers who were suffering from affordability issues last year. This apart, the recent homebuilding statistics raise hopes for the overall industry.

Notably, homebuilders' confidence climbed to its highest level in seven months, according to the recently released report by the National Association of Home Builders ("NAHB"). According to the report, the Housing Market Index (HMI) increased 3 points to 66 in May from April on declining mortgage rates and moderating home prices and higher home sales.

Additionally, total housing starts in April increased 5.7% from March, per the U.S. Housing and Urban Development and Commerce Department. Single-family housing starts in the same month grew 6.2% from the prior month. Low unemployment, solid job growth, wage gains and favorable demographics are driving demand for homes in recent times.

Certainly, the above-mentioned data raises hope for the industry in the near term. Yet, ongoing land and labor shortages along with rising material costs remain concerns for builders. Most importantly, the trade war with China is limiting the industry's upside potential. Markedly, on May 9, the Trump administration raised tariffs from 10% to 25% on $200 billion of Chinese products.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss . This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance  for information about the performance numbers displayed in this press release.


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Lyon William Homes (WLH): Free Stock Analysis Report

D.R. Horton, Inc. (DHI): Free Stock Analysis Report

Meritage Corporation (MTH): Free Stock Analysis Report

Lennar Corporation (LEN): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Stocks
Referenced Symbols: WLH , DHI , MTH , LEN



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