XHB - Homebuilder Stocks In 2024: Can The Sector Enjoy Another Stellar Year? | Benzinga
As the slowdown in home sales continues through 2023, homebuilders could be facing a tough few months in early 2024 as interest rates remain at multi-year highs and the labor market growth begins to stall.
While sales are falling — largely due to affordability issues given higher interest rates — builders have continued to show growth in construction because of chronic shortages of new housing supply.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR Chief Economist Lawrence Yun.
Shares Have Strongly Outperformed The Market
Slowing sales, however, have had little impact on the shares in the sector. DR Horton (NYSE:DHI), the biggest homebuilder on the S&P 500 by market capitalization, is up 44% year to date, while Lennar Corporation (NYSE:LEN), ranked second in market cap, has gained 42% this year.
Two other builders have had outstanding performances this year: Toll Brothers (NYSE:TOL), which operates in the higher-end homes sector where affordability issues are less of a concern, has gained 86%, while PulteGroup (NYSE:PHM) is up 94%.
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