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Mortgage applications to purchase a home declined 13% year-over-year, negatively impacting companies operating in the housing business. Furthermore, impending Fed tapering moves, potential changes to monetary policy, and ongoing supply chain constraints are expected to dampen the homebuilding industry’s near-term prospects.
Given the industry’s gloomy growth prospects, we believe homebuilding stocks D.H Horton Inc. (DHI), NVR Inc. (NVR), Toll Brothers Inc. (TOL), and KB Home (KBH) could suffer a downtrend in the near term. So, these stocks are best avoided now.
