It seems likely that as mortgage rates continue falling and consumer confidence restabilizes, the U.S. housing market will finally stage a huge recovery this year.
That’s why we’re confident that housing stocks will be one of the best ways to make money in 2024. And in fact, it seems the housing market recovery has already started.
This past week brought lots of bullish data that bodes well for the sector.
We learned that in January, homebuilder sentiment jumped by the most it has since the COVID pandemic emerged. That’s because as mortgage rates have fallen over the past few months, there’s been a sharp uptick in home-buying demand. And now builders are becoming increasingly confident about the market’s outlook.
We also learned that, this month, mortgage applications jumped to their highest level since summer 2023. Additionally, consumer sentiment in January jumped to its highest level since summer 2021.
Not to mention, the median price on existing U.S. home sales rose by 4.4% in December. That continues a multi-month trend of rebounding home prices.
Across the board, the data suggests that the U.S. housing market is positioned for a big recovery in 2024.
And that creates an attractive investment opportunity in housing stocks.
The Final Word on the Housing Market
Right now, the S&P 500’s Real Estate sector is trading at less than 3X book value. That is a full standard deviation below the sector’s 10-year average book multiple.
At the same time, sales and earnings across the sector are expected to rise sharply in 2024 after falling in 2023.
In other words, housing stocks should benefit from both multiple expansion and strong profit growth in 2024. And that should lead to really big gains for investors.
Needless to say, we’re very bullish on housing stocks this year.
But we think some of those stocks will rise a lot more than others.
Should you be invested in homebuilders? Housing tech stocks? Furniture retailers? Mortgage companies?
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.