MHO - M/I Homes: Economic Data Indicates Homebuilding Cycle Is Past Its Peak
2024-06-13 15:23:03 ET
Summary
- M/I Homes stock has dropped 8% since I last covered it, indicating that more investors see the homebuilding market peak.
- TTM income valuations on M/I Homes may not be wise as its margins will reverse as existing home inventories and rental vacancies continue to rise.
- Home affordability and existing home sales remain very low, indicating a potential downturn in new home sales.
- Although M/I's focus on key market regions and growing demographic segments has aided its profits, the market's shift may most impact first-time buyers.
- I believe MHO's valuation remains unreasonably high if we assume mortgage rates will eventually create strains on new home prices.
At the end of last year, I published " M/I Homes: A Speculative Rally Built On Sand " regarding the homebuilding company M/I Homes ( MHO ). At that time, the stock was coming off of a massive rally from 2022 that sent it over 3X higher. The stock traded at $135 then and now sells for $124, 8% lower. That article was published within a few days of MHO's current peak....
M/I Homes: Economic Data Indicates Homebuilding Cycle Is Past Its Peak