Homebuilding industry stalwarts and their smaller peers continue to advance along with rate-cut hopes. D.R. Horton and several other homebuilder stocks broke out on Tuesday. Lennar and some peers rose below buy points. KB Home grew extended from its latest breakout.
Rate Cuts Would Boost Homebuilder Stocks
Home construction stocks have surged massively since last week's cooler-than-expected inflation report for June. The report boosted investors' hopes for a Fed interest-rate cut.
Federal Reserve Chair Jerome Powell signaled again on Monday that rate cuts are coming later this year, but declined to say exactly when. He did, however, say that the central bank will not wait until inflation hits 2% to cut interest rates.
Markets are now fulling pricing in a Fed rate cut in September, and now expect three cuts by year's end.
Lower rates would make borrowing less expensive, including mortgages. Steep mortgage rates kept many potential homebuyers on the sidelines due to higher monthly payments on generally expensive homes. The capital-intensive homebuilding industry itself would benefit from lower borrowing rates.
D.R. Horton Stock Breaks Out, KBH Home Stock Hits High
On the stock market today, homebuilder stocks generally shot up 4%-7% .
D.R. Horton stock topped a 157.72 buy point on Tuesday. A previous breakout in March near that same entry fizzled. NVR and Taylor Morrison Home decisively cleared entries at 62.64 and 62.10, respectively. Last Friday, NVR stock tested its latest flat-base buy point but closed below it. Taylor Morrison flirted with its double-bottom buy point on Monday.
Among other home construction stocks, PulteGroup broke out past a 122.72 buy point on Tuesday. Meritage Homes seized a 189.96 entry. Lennar stock jumped within 1% of a 171.27 entry. Toll Brothers closed within 2% of a 135.37 buy point.
On Tuesday, KB Home stock surged above the top of its 5% buy zone. That means shares are slightly extended from a breakout last Friday past a 74.66 flat-base buy point. They are well-extended from a mid-May breakout from a cup-with-handle buy point, up more than 16% from that earlier entry.
KBH stock made a nearly two-decade high on Tuesday. The leading homebuilder stock has surged more than 31% so far this year.
