© Reuters.
In light of increasing mortgage loan rates, Oppenheimer & Co. analysts have recommended investment in shares of major home builders and exchange-traded funds (ETFs) on Thursday. The analysts suggest that larger builders such as D.R. Horton Inc., Lennar Corp (NYSE:)., NVR (NYSE:) Inc., PulteGroup Inc (NYSE:)., Toll Brothers (NYSE:) Inc., and Tri Pointe (NYSE:) Homes Inc. are poised to benefit due to their ability to offer mortgage incentives in a challenging market.
The Mortgage Bankers Association has reported a rise in mortgage loan rates, which has led to a growing demand for new homes from these large-scale builders. In addition, industry suppliers like Builders FirstSource Inc., Floor & Decor Holdings (NYSE:) Inc., Home Depot Inc (NYSE:)., and Lowe’s (NYSE:) Cos. Inc., have seen an expansion in their market share.
Data from FactSet shows that the top ten U.S. builders held a 42.6% share in 2022. Among the recommended ETFs are iShares U.S. Home Construction ETF ITB and SPDR S&P Homebuilders (NYSE:) ETF XHB, which provide exposure to these leading companies.
PulteGroup has been singled out by the analysts as their “top pick in the space,” with a set price target of $110. This advice comes as these major builders continue to leverage mortgage incentives to attract buyers amidst the climbing loan rates.
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