14 Best Housing Stocks To Buy According to Hedge Funds

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In this article, we discuss the 14 best housing stocks to buy according to hedge funds. To skip the detailed analysis of the housing market, go directly to the 5 Best Housing Stocks To Buy According to Hedge Funds.

For the first time since July 2022, the median home prices in all the US states have either risen or stayed the same in the four weeks ending April 28, as reported by Redfin Corporation (NASDAQ:RDFN) on May 2. Home prices are rising despite mortgage rates going above 7% as people locked in at lower mortgage rates are reluctant to sell their homes, creating supply shortages. Moreover, on April 19, Redfin Corporation (NASDAQ:RDFN) reported that luxury homes have reached record prices with a median price of $1.225 million. In Q1, luxury home sales increased by 2% despite the prices rising 9% and total supply increasing by 13% year-over-year. Compared to that, the prices of nonluxury homes increased by 4.6% year-over-year and its sales were down 4%.

Luxury Home Builder Expanding Further

Toll Brothers, Inc. (NYSE:TOL) is one of the largest builders of luxury homes in the United States. On April 25, the company announced its new project, Griffith Lakes – Waterstone Collection in Charlotte, North Carolina. The construction of the 52 new luxury homes is set to start in the spring of 2024 while sales will begin in the summer of this year. It reported its first-quarter earnings on February 20 and posted an EPS of $2.25, which outperformed the estimates by $0.47. The company’s revenue grew nearly 10% year-over-year to $1.95 billion. In the second quarter, Toll Brothers, Inc. (NYSE:TOL) expects deliveries of 2,400 to 2,500 units averaging at $1 million to $1.01 million per home. For the full year, the company expects to make 10,000 to 10,500 deliveries at $940,000 to $960,000 per home.

Investment management firm Baron Funds appreciated the performance of Toll Brothers, Inc. (NYSE:TOL) in its first quarter 2024 investor letter. The firm said that it met with its CEO, Doug Yearley, the CEO of D.R. Horton, Inc. (NYSE:DHI), Paul Romanowski, and Lennar Corporation’s (NYSE:LEN) CEO Stuart Miller It believes that these companies are “well positioned to generate strong long-term shareholder returns.”

Toll Brothers, Inc.’s (NYSE:TOL) CEO made the following comments at the company’s Q1 2024 earnings call:

“At first quarter end, we controlled approximately 70,400 lots, 49% of which were optioned. This land position allows us to be highly selective and disciplined as we assess new land opportunities. We believe we have a competitive advantage acquiring land at the corner of Main and Main, where very few of the big well-capitalized publics and privates play. Our main competition for this land tends to be the smaller local and regional builders who are not as well capitalized. Our balance sheet is very healthy with ample liquidity, low net debt and no significant near-term debt maturities. We also continue to expect strong cash flow generation from operations this year. In addition, as I mentioned earlier, we received $181 million in cash from a land sale at the start of our second quarter.