The US residential construction market has been strong despite the coronavirus that has hit most other industries over the past year and a half. Although residential construction slowed somewhat in the first part of the year, it still has enough momentum. This is being proven every month as more and more people flock to the market to buy new homes.
Housing starts and building permits rose in August, reflecting that residential construction activity is in full swing in the United States. While rising prices and low inventories have been concerns for the homebuilding market lately, that hasn’t stopped people looking for new homes.
Housing starts, increase in building permits
The Commerce Department said on Wednesday that homebuilding activity increased at a steady pace in August. The report says housing starts rose an impressive 3.9% to a seasonally adjusted annual rate of 1.615 million units in August. This figure was higher than economists’ expectations of 1.555 million units.
In addition, the July data has been revised at a rate of 1.554 million units from the 1.534 million units reported earlier. Building permits rose 6% in August, marking the largest increase since January. This reflects an impressive leap in multi-family homes. In addition, permit applications for single-family homes increased in August.
Housing starts have slowed somewhat since reaching multi-year highs in March. This is due to rising prices for materials and labor. At the same time, the availability of land has also been a challenge. However, even then, builders are building new homes as demand continues to be high.
Booming residential construction market
The residential construction market has performed extremely well during the peak of the pandemic. Many wanted to leave the densely populated cities and move to the suburbs, which resulted in increased sales of new homes. In addition, record interest rates have helped people buy homes at lower prices.
Mortgage rates started to rise with the start of the year. In addition, the costs of raw materials and labor have increased, which has slowed down the housing market somewhat. Despite this, the residential construction market is doing well as the demand for housing continues to rise.
According to the Census Bureau and the Department of Housing and Urban Development, new home sales rose 1% in July to a seasonally adjusted annual rate of 708,000. Meanwhile, existing home sales rose 2% in July.
There were already a few homes compared to high demand before the pandemic, and now fewer homeowners are willing to put their homes up for sale. This is still helping to raise house prices and the trend is expected to continue in the days to come.
The residential construction market is still dynamic despite rising prices and demand for housing will continue until 2021. So now is the right time to invest in residential construction stocks.
Communities of the Century, Inc. CCS is a house building and construction company. Its activities include acquisition, development and land rights; and the acquisition, development, construction, marketing and sale of various detached and semi-detached single-family home projects.
The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 16.1% in the past 60 days. Century Communities wears a Zacks Rank # 2.
Meritage Houses Company MTH primarily engages in the construction and sale of single-family homes for entry-level buyers, first-time buyers, luxury buyers and active adult buyers in historically high growth regions of the United States.
The company’s expected profit growth rate for the current year is 72.4%. Zacks’ consensus estimate for current year earnings has improved 28.9% in the past 60 days. The company sports a Zacks Rank # 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
MI Homes, Inc. MHO is one of the nation’s leading builders of single family homes. It serves a large segment of the housing market, including first-time buyers, top home buyers, luxury buyers, and empty home buyers.
The company’s expected profit growth rate for the current year is 63.3%. Zacks’ consensus estimate for current year earnings has improved 32.5% in the past 60 days. The company sports a Zacks Rank # 1.
TRI Pointe Group, Inc. TPH is involved in the design, construction and sale of single-family homes. The company’s operating portfolio includes Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia.
The company’s expected profit growth rate for the current year is 66.8%. Zacks’ consensus estimate for current year earnings has improved 9.7% in the past 60 days. TRI Pointe has a Zacks Rank # 2.
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Meritage Homes Corporation (MTH): Free Inventory Analysis Report
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MI Homes, Inc. (MHO): Free Inventory Analysis Report
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