Home-Builder Rally Fueled by Low Interest Rates, Millennials
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U.S. home builders benefited from low interest rates this year as housing starts climbed to levels not seen in a decade and new-home sales surged after a disappointing 2018.
Builder confidence, as measured by the National Association of Home Builders, is now the highest since 1999. And publicly traded home-builder stocks beat the S&P 500 average this year, rising 40% as of Dec. 23, compared with the broad index’s 29% gain over the same period.
Home builders cranked up volume partly by focusing on homes more buyers can afford. Large builders including Meritage Homes Corp. and MDC Holdings Inc. made strategic shifts to produce a higher number of less-expensive homes, targeted at a generation of millennials with lower purchasing power than average buyers in the past.
In the third quarter of this year, the average price of a Meritage home fell 4.4% while the number of home orders rose 24%, driven by demand in the entry-level category.
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Builder confidence, as measured by the National Association of Home Builders, is now the highest since 1999. And publicly traded home-builder stocks beat the S&P 500 average this year, rising 40% as of Dec. 23, compared with the broad index’s 29% gain over the same period.
Home builders cranked up volume partly by focusing on homes more buyers can afford. Large builders including Meritage Homes Corp. and MDC Holdings Inc. made strategic shifts to produce a higher number of less-expensive homes, targeted at a generation of millennials with lower purchasing power than average buyers in the past.
In the third quarter of this year, the average price of a Meritage home fell 4.4% while the number of home orders rose 24%, driven by demand in the entry-level category.
Read More →
By Will Parker | 24 Dec 2019
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