Trading.biz analyst Rahul Nambiampurath is equally bullish on the housing market as he is regarding technology and AI going further into 2024.
He believes that despite the continued supply or the booming surge in the construction of new apartments, the demand continues to outpace the former.
“The expectations around the possible and upcoming rate cuts by the Feds is yet another reason why individuals are flocking to the housing market,” mentions Rahul.
He also believes that even though the 30-year fixed mortgage rates are still above 6%, they are down from the 2023 highs due to a more dovish stance by the feds — a reason why the home purchasing power is seeing some strength.
Which stocks and themes are in focus?
The housing market isn’t just about the home builders. Suppose there is a housing market boom coming our way. In that case, we can also consider stocks related to Real-estate Investment Trusts or REITs supporting fractional ownership, home improvement and construction supplies, financial services and mortgage lenders, and more. Here are some of the key stocks that Rahul believes traders and mid-term investors should eye:
- Lennar (LEN): Up 5.89% month-on-month
- NVR Inc. (NVR): Up 7.26% month-on-month
- Home Depot (HD): Up 8.25% month-on-month
- Equity Residential (EQR): Up 3.81% month-on-month
- Wells Fargo (WFC): Up 13.06% month-on-month
Every stock on the list has shown some positive activity over the past 30 days, priming for a more aggressive move in the future.
Why Lennar could outperform others in the months to come
Lennar Corporation could be a game-changer in 2024 as LEN recently reached an all-time high price point, driving folks to a rewarding housing market. If Q4 2023 numbers are considered, Lennar reported a diluted EPS of $4.82, which beat the Q4 2022 performance by 27 cents to a dollar.
In Q4 2022, new home orders boomed for Lennar at 17,366, which equates to a 32% rise compared to the last quarter. As demand for new homes is expected to increase, LEN could be the stock to hold or buy in the short-to-mid-term.
The daily price chart of LEN indicates mixed signals. The short-term analysis is bullish, with LEN breaking out of the ascending triangle pattern. This could lead to an immediate price surge of up to $165.
Lennar (LEN) daily chart: TradingView
However, looking at the arrows, overseeing the price action, and the relative strength index (RSI) indicator, LEN might be in for a correction. The RSI hints at a bearish divergence or weakening momentum in the mid-term, which could allow new buyers to take positions in Lennar at levels closer to $145.
But then, a move above $170 could invalidate the bearish waves.
Tyler from Kenji Capital highlighted Lennar back on August 19, 2023, when he mentioned the following bit on X, “Warren Buffett just invested $861M into home builders. Most of it went into DR Horton ($726M), but also into Lennar and NVR.”
However, as Rahul pointed out earlier, other housing market-related stock picks exist if you want to add some to the portfolio.
