Housing stocks have struggled this year as mortgage rates ride a roller coaster amid Trump’s sweeping tariff plans. However, according to Wedbush, that turbulence could offer a buying opportunity.
“We would use the sell-off as a buying opportunity for builders that generate 50% or more of annual sales from move-up and active adult buyers since those buyers tend to be less rate-sensitive than entry-level buyers,” Jay McCanless, senior vice president of equity research, wrote in a note to clients.
The latest policy moves from the administration have brought uncertainty to the market, affecting various sectors, including housing. But builders like Toll Brothers (TOL), Taylor Morrison (TMHC), PulteGroup (PHM), and M/I Homes (MHO) may be positioned to weather the storm as these builders target “move-up” and “active adult” segments, a buyer group that tends to be more resilient in a high interest rate environment.
Mortgage rates have remained volatile this week, with some measures showing rates approaching 7%. While Trump has paused new tariffs on some trading partners, China’s levies remain very high, which continues to weigh down market sentiment.
Shares of Toll Brothers, Inc. (TOL), D.R. Horton, Inc. (DHI), and Lennar Corporation (LEN) were mixed during Monday’s trading, with Toll down 0.8%, Lennar off by 0.1%, and D.R. Horton up 0.4%.
