Home builder stocks have the potential to become extremely valuable long-term investments. With mortgage rates projected to come down, a unique opportunity exists to capitalize on the housing market rebound.
Right now, valuations in the home building sector look extremely attractive. That leaves room for a significant amount of upside potential for discerning investors. Additionally, there is a housing shortage across the United States, making these companies well-positioned to meet market demands. As investors seek exposure to the real estate sector, these three companies may prove excellent picks for this April.
Now, let’s discover the top home builder stocks this month!
DR Horton (DHI)
DR Horton (NYSE:DHI) is currently America’s largest home builder, boasting a nationwide presence and reputation for quality construction. The company has diverse product offerings, catering to a wide range of price points and buyer preferences.
One of DR Horton’s key strengths is its focus on entry-level homes, an area that consistently sees high demand. With the affordability of homes remaining a pressing concern for first-time home buyers, the company’s dedication to this market segment positions it well for future growth. Moreover, the supply of new and existing homes remains limited, providing it a strong competitive advantage. In the company’s latest quarterly results, DR Horton’s revenue increased 6% year-over-year (YOY) to $7.7 billion. Net sales for new homes increased by 35% YOY, as demand continued to outpace supply. With the prospect of lower mortgage rates in the back half of 2024, DR Horton remains one of the top home builder stocks in April 2024.
Lennar (LEN)
Lennar (NYSE:LEN) is another major player within the home building industry, particularly well-known for its active adult communities. It is the second largest home builder in the United States, catering to individuals who want access to a wide array of amenities and a higher quality of life.
Lennar’s stand-out feature is its ‘’everything included’’ approach, offering buyers a simplified purchasing process with premium upgrades. That model helps foster buyer confidence while streamlining the often complex construction process. The company’s emphasis on providing a superb customer experience has been a huge contributor to its success over the last decade. In Q1 FY24, Lennar’s revenue increased 13% YOY to $7.31 billion. Net income swelled by 21% to $720 million, or $2.57 per share. Total deliveries during the quarter increased 23% to 16,798 homes, as pricing incentives drove strong double-digit growth. As interest rate risks continue to subside, Lennar is set to continue growing market share through 2024.
Toll Brothers (TOL)
Toll Brothers (NYSE:TOL) sets itself apart as a leading luxury homebuilder. Its expertise lies in high-end customization, catering to buyers seeking premium finishes, personalized options and exclusive communities.
According to Statista, Toll Brothers was the fifth largest homebuilder in the United States by revenue in 2022. As a premium home builder, Toll Brothers is positioned to capitalize on this market trend to further drive revenue growth and profitability. It has built a strong brand reputation characterized by its quality craftsmanship, supporting its pricing power within this luxury segment. In the company’s latest quarterly results, its revenue increased 9% YOY to $1.95 billion. Adjusted gross margin increased by 140 basis points to 28.9%, with net new contracts up substantially. Furthermore, net earnings swelled 25% YOY to $239.56 million. That makes Toll Brothers one of the best home builder stocks to buy now as the market continues to gain traction.
On the date of publication, Terel Miles did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.