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The NAHB housing market index in the United States edged up one point to 83 in April 2021. Moreover, investors’ interest in the homebuilding stocks is evident in the SPDR S&P Homebuilders ETF’s (XHB) 27.2% gains over the past three months compared to the SPDR S&P 500 ETF Trust (SPY) 13.5% returns.
Given the powerful demand for houses, suppliers are challenged by low inventory. Millennial home ownership is also on the rise despite rising home prices. Amid this favorable backdrop, we think it is wise to bet on established homebuilding companies that are positioned to capitalize on the tailwinds. We believe Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (PHM), and Skyline Champion Corporation (SKY) are such companies and are best picks in this space now.
