NEW YORK, UNITED STATES – 2020/09/13: The Home Depot logo and store seen in Queens Borough of New … [+]
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Our theme of Housing Stocks which includes the stocks of home builders, building products companies, and home improvement companies, continues to outperform rising by about 45% year-to-date, well ahead of the S&P 500 which has gained about 25% over the same period.
Data from the housing market has been somewhat mixed recently. While the number of new permits issued for future construction rose by 4%, housing starts, which are an indicator of new home building activity, declined 0.7% to a seasonally adjusted annual rate of 1.520 million units in October. The decline is partly due to material shortages and rising prices and constraints in the land and labor markets. However, the demand for housing remains strong, with a severe shortage of previously owned homes on the market resulting in record house price increases. The median sales price of houses sold in the U.S. soared to about $405,000 in Q3 2021, an increase of about 20% versus last year. This should bode well for home builders and building products companies in our theme going forward.
Within our theme, Home Depot (NYSE:HD) has been the strongest performer, with its stock remaining up by about 45% year-to-date. On the other side, Installed Building Products (NYSE:IBP), an installation contractor for insulation for residential and commercial projects, has been among the weaker performers in the theme, rising by about 35% year-to-date.
[10/14/2021] Housing Stocks Are Worth A Look Despite Mixed Building Data
Our theme of Housing Stocks which includes the stocks of home builders, building products companies, and home improvement companies, continues to outperform rising by about 20% year-to-date, well ahead of the S&P 500 which has gained about 16% over the same period. However, the theme is down by about 7% since our last update in late August.
Data from the housing market has been somewhat mixed recently. Overall housing starts, which are an indicator of U.S. new home building activity, advanced 3.9% to a rate of 1.615 million units in August. However, single-family starts, which represent the largest segment of the market, declined 2.8% to a seasonally adjusted rate of 1.076 million units. This is likely due to higher material costs and a shortage of labor. That said, demand is likely to remain robust in the near-to-medium term driven by …….