NEW YORK: Lower U.S. interest rates could help support outperforming U.S. homebuilder stocks, even as they raise worries about the economy, while a bonanza of industry data and Federal Reserve speakers next week are likely to help shape the outlook.
The 30-year fixed mortgage rate has dropped to 3.60per cent from a peak of 4.94per cent in November, according to data from mortgage finance agency Freddie Mac. Mortgage rates are often tied to the benchmark 10-year Treasury yield. "Consumer savings have come up, household formation continues to grow faster than the supply of housing," Marshall said."And I think all of those things coming together make for a more stable environment for the publicly traded housing stocks."
Multiples for some of the homebuilder stocks have jumped this year, but many remain below long-term averages. The S&P 500 homebuilding index , which includes PulteGroup, D.R. Horton and Lennar, is trading at about 9.5 times forward earnings, up from about 7 at the start of the year but well below a long-term average of 14.6, based on Refinitiv's data.