Mortgage Rates Soar, Cash Buyers Score: The New Homebuying Playbook
Portfolio Pulse from Neil Dennis
Mortgage rates have risen to 6.69%, causing U.S. home loan applications to hit a 28-year low. Despite this, cash sales for homes have increased, with the national average share for cash sales rising to 38% in 2023. D.R. Horton reported higher sales and revenues but with reduced margins and earnings. The iShares U.S. Home Construction ETF, which includes D.R. Horton, Lennar, and Pulte Group among its top holdings, saw a 67% gain over the year.
January 30, 2024 | 8:15 pm
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NEUTRAL IMPACT
D.R. Horton reported increased home sales and revenues for 2023, but with a decrease in margins and earnings due to higher sales incentives and discounts.
While D.R. Horton reported growth in sales and revenues, the negative impact on margins and earnings due to increased incentives could temper investor enthusiasm, leading to a neutral short-term impact.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The iShares U.S. Home Construction ETF, with top holdings including D.R. Horton, Lennar, and Pulte Group, gained 67% over the year despite rising mortgage rates and a challenging market for homebuyers.
The significant gain of 67% for the ETF suggests strong investor confidence in the home construction sector, which could continue to drive positive short-term momentum.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Lennar Corporation is one of the top holdings in the iShares U.S. Home Construction ETF, which saw a 67% gain over the year.
As a top holding in the ITB ETF, Lennar may benefit from the ETF's overall performance, suggesting a positive short-term impact on its stock price.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
POSITIVE IMPACT
Pulte Group is included as a top holding in the iShares U.S. Home Construction ETF, which experienced a 67% increase over the year.
Pulte Group's position as a top holding in the ITB ETF, which has performed well, may lead to a positive short-term impact on its stock price.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50