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iShares U.S. Home Construction ETF (BATS:ITB), 空売り情報

iShares U.S. Home Construction ETF

Consumer Cyclical

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The Fund seeks to track the investment results of the Dow Jones U.S. Select Home Construction Index; the Underlying Index, which measures the performance of the home construction sector of the U.S. equity market, as defined by S&P Dow Jones Indices LLC; the Index Provider or SPDJI.

D.R. Horton Inc - Common

Lennar Corp. Class A

Pultegroup Inc.

Nvr Inc Common Stock Usd 0.01

Sherwin Williams Co/The

Topbuild Corp

Lowes Cos., Inc.

Toll Brothers Inc

Home Depot Inc/The

Builders Firstsource Inc

iShares US Home Construction ETF

The January Consumer Price Index came in higher than expected with inflation hot to start<a href="https://www.benzinga.com/government/regulations/25/02/43656846/inflation-rises-more-than-expected-in-january-chills-interest-rate-cut-hopes"> 2025.</a>
What Happened: CPI rose 3% on a year-over-year basis in January, missing expectations for 2.9%. <a href="https://www.benzinga.com/topic/cpi">CPI was up</a> 0.5% on an adjusted basis from December to January, up from 0.4% in the previous report.
Rising inflation figures have now pushed back expectations for a Federal Reserve rate cut to December 2025.
The 0.5% <a href="https://www.bls.gov/news.release/pdf/cpi.pdf">monthly </a>CPI figure was the largest increase since August 2023 and it adds to consumers&#8217; worries for 2025 on the heels of potential tariffs that could increase prices on everyday goods and services.
Within the CPI report, housing data showed rising costs. Rent of primary residence rose 0.3% in January and rose 4.2% on a year-over-year basis.
Owners' equivalent of residences was also up 0.3% in January and is now up 4.6% on a year-over-year basis.
While the housing figures rose in January, rent price inflation is cooling. Comerica Bank&#8217;s chief economist Bill Adams said the cooling rent price inflation was the "one piece of good news for consumers" in the CPI report.
"The year-over-year increase of rent of primary residence was the coolest since February 2022," Adams said, adding that the report showed rent increases could show relief in the rest of 2025.
Core CPI, which excludes food and energy rose 0.4% in January and is up 3.3% on a year-over-year basis, rising from 3.2% year-over-year in the last report.
Economist Joseph Brusuelas highlighted the rising rents and housing costs in his breakdown of the CPI data.
"Take a look at rents. They are up 4.6% from one year ago. Housing costs up 3.8%, rent of primary residence 4.2% and shelter 4.4%. Even lodging away from home is up 3%," Brusuelas tweeted.
Read Also:<a href="https://www.benzinga.com/economics/macro-economic-events/25/02/43660298/inflation-spike-sparks-dollar-rally-yields-jump-while-bitcoin-stocks-slide-as-interest-rate-cut-doubts-grow"> Inflation Spike Sparks Dollar Rally: Yields Jump, Bitcoin And Stocks Slide As Interest Rate Cut Doubts Grow</a>
Why It's Important: Ahead of the CPI report, President Donald Trump called for lower interest rates. With rising inflation and a worse than expected report, the Federal Reserve could delay further rate cuts.
On Tuesday, Federal Reserve Chair Jerome Powell told the Senate Banking Committee the Fed<a href="https://www.benzinga.com/economics/macro-economic-events/25/02/43628752/feds-powell-reiterates-no-hurry-to-cut-interest-rates-as-inflation-remains-somewhat-elevated"> was in no hurry</a> to adjust interest rates. Powell cited continued inflation as the Fed works towards a 2% inflation goal.
"Inflation remains somewhat elevated," Powell said.
While the Fed has cut rates in recent months, Powell said "we do not need to be in a hurry to adjust our policy stance."
Mortgage rates do not always go down when the Federal Reserve cuts interest rates, but the two items often trade in pair. With concerns that the Fed will not cut rates again until late 2025, mortgage rates could face pressure and consumers looking to buy homes could be forced to wait for lower rates and rent or pay the higher price.
Mortgage rates sat at 6.9% for a 30-year fixed mortgage at the time of writing.
Price Action: The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), which tracks the S&amp;P 500 Index, is down 0.6% to $601.51 on Wednesday.
The Vanguard Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>) is down 1.5% to $90.65 on Wednesday.
The iShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) is down 3.1% to $100.49 on Wednesday.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/markets/bonds/25/01/42963973/housing-demand-falls-as-average-30-year-mortgage-rate-above-7">Housing Demand Falls As Average 30-Year Mortgage Rate Above 7%</a></li>
</ul>
Photo: Shutterstock

News

iShares Dow Jones US Homenstruction Index Fund

Inflation Rises In January, Housing Costs Up, Adding To Consumers' 2025 Concerns

Hedge funds have always been closely watched for cues on investment opportunities. Although their strategies can be complex, understanding the trends they're bullish on can offer important insights for retail investors. 
Siddharth Singhai, CIO of value-based global hedge fund IronHold Capital, recently shared his perspective on sectors worth watching, and how <a href="https://www.benzinga.com/etfs">ETFs can help investors</a> capitalize on these themes. 
From automobiles and homebuilding to mining and AI, here are some ETFs based on his insights:
<h1 class="wp-block-heading">Automobile Industry On Third Gear</h1>
One area drawing attention is the U.S. auto industry. With protectionist policies likely to intensify under the Trump administration, automakers such as General Motors Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GM#NYSE">GM</a>), Ford Motor Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>), and Stellantis NV (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/STLA#NYSE">STLA</a>) stand to benefit significantly, according to Singhai. 
Possible tariffs on Chinese electric vehicles could set the playing field for these companies, making the U.S. auto sector one to keep a close eye on. 
&#8220;We do anticipate a clear protectionism policy in place for U.S. auto, specifically the big three: General Motors, Ford and Stellantis. Simply because if the tariffs were not put in place against Chinese EVs, U.S. automakers would be at about a 30% to 40% cost disadvantage, which would essentially mean the end of U.S. auto as we know it,&#8221; said Singhai.
However, as a word of caution, he said that one should be wary of auto companies that might face trouble in the face of EV revolution. 
&#8220;We believe U.S. autos and U.S. auto parts suppliers, who have been hit badly due to the excess inventories prevailing in the U.S. auto industry in general, could be a good hunting ground, potentially. Although investors should be focused on auto suppliers that are probably not going to get disrupted by the EV transition,&#8221; Singhai said.
For investors, ETFs like the First Trust S-Network Future Vehicles &amp; Tech (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CARZ#NASDAQ">CARZ</a>) offer exposure to the expected surge in domestic automotive manufacturing. The ETF has an expense ratio of 0.7% and among its holdings are Tesla, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>), Ford, General Motors and Stellantis.
See Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/25/01/43236579/chinas-deepseek-ai-rattles-tech-stocks">China&#8217;s DeepSeek AI Rattles Tech Stocks, Analyst Ives Says Market Plunge &#8216;Golden Buying Opportunity&#8217;</a>
<h1 class="wp-block-heading">Home Building Industry In Focus</h1>
Homebuilders are another promising area, according to Singhai. Despite overvaluation concerns in the equity market, the housing sector continues to experience a significant supply-demand imbalance. Years of undersupply following the 2008 financial crisis created the opportunity for select homebuilding companies to thrive.
&#8220;U.S. market is extremely overvalued at the moment, and there are not that many sectors that could be happy hunting grounds for hedge funds or value investors like us. In general, homebuilders, some of them, seem to be still attractively positioned given the great imbalance between supply and demand, mainly because of years of undersupply post-Great Recession in 2008-&#8217;09. So we believe homebuilders, some of them, present very compelling opportunities,&#8221; Singhai noted.
Investors interested in this space might consider ETFs such as the iShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>), which focuses on leading players in the sector, such as Builders Firstsource, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BLDR#NYSE">BLDR</a>) and Lowes Companies, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LOW#NYSE">LOW</a>). The expense ratio that this ETF carries is 0.39%.
<h1 class="wp-block-heading">Mining — Hidden Gems To Look For</h1>
Mining is another area that stands out. Many companies in this space, especially low-cost producers, are undervalued and largely overlooked by the market. These firms could see strong performance with a rebound in global demand for raw materials.
&#8220;Mining companies also seem to be hit badly and ignored by investors. You could find some really good mining companies that are the lowest cost producers in their respective industries that could prove to be high performers over the next two to three years,&#8221; Singhai noted from his expertise.
ETFs such as the SPDR S&amp;P Metals and Mining ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XME#NYSE">XME</a>) invest in a range of mining companies and could be a good fit for investors looking to capture growth in this area. The ETF carries an expense ratio of 0.35% and holdings in Hecla Mining Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HL#NYSE">HL</a>) and Reliance Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RS#NYSE">RS</a>), among others.
<h1 class="wp-block-heading">AI Trends To Watch</h1>
Singhai also touched upon the continued interest in semiconductors and AI. While these industries are undeniably buzzing, he warns against impulsive investing. Many companies in this space are trading at lofty valuations that may not be sustainable. 
&#8220;I do foresee a lot of hedge funds diving right into semiconductors and AI stocks. I also believe more retail investors will seriously consider allocating capital to this particular sector moving forward as well. However, it is ripe with extreme bubble-like valuations. The marquee names in the AI industry are trading for as high as 20 to 50 times revenue, which to us seems excessive even given the promise of AI,&#8221; he said.
Singhai also added, &#8220;Not all AI companies can capture 50% of the market or even 30% of the market, and if they fail to do so, they cannot foreseeably justify their current valuations. This leads us to the ultimate conclusion that there will be a few big winners and many, many losers within the industry. As such, most AI companies do not deserve their expensive, hefty valuations.&#8221;
For those interested in exploring the AI-driven growth story, a diversified ETF like the VanEck Semiconductor ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SMH#NASDAQ">SMH</a>) offers exposure to leading players like NVDIA Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) and Broadcom Inc&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AVGO#NASDAQ">AVGO</a>) while mitigating the risks of betting on individual stocks. And the cost of investing in this ETF is also reasonable at 0.35%.
All that said, Singhai emphasized the route of ETFs should be seen as tools for diversification and steady returns — not as a shortcut to mimicking hedge fund performance. It will be wise for retail investors to focus on sectors with solid fundamentals rather than on speculative trends.
See Next: 
<ul>
<li><a href="https://www.benzinga.com/etfs/new-etfs/25/01/43198940/how-foliobeyonds-innovative-fixed-income-etf-can-provide-low-risk-income-generation-in-volatile-tim">How FolioBeyond&#8217;s Innovative Fixed Income ETF Can Provide Low-Risk Income Generation In Volatile Times</a></li>
</ul>
Photo: Shutterstock

Sector ETFs

Broad U.S. Equity ETFs

Hedge Funds

ETFs

AVGO

BLDR

CARZ

NVDA

STLA

TSLA

IronHold Capital CIO Reveals Trends Hedge Funds Track: 4 ETFs To Watch

D.R. Horton, Inc.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) shares traded higher after the company <a target="_blank" href="https://www.benzinga.com/pressreleases/25/01/b43092125/d-r-horton-inc-americas-builder-reports-fiscal-2025-first-quarter-earnings-and-declares-quarterly-" rel="noreferrer noopener">reported&nbsp;first-quarter&nbsp;results</a>.
Sales fell&nbsp;1%&nbsp;year-over-year to&nbsp;$7.61&nbsp;billion, beating the consensus of&nbsp;$7.08 billion. EPS was&nbsp;$2.61,&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">beating the consensus of&nbsp;$2.44.</a>
Net sales orders fell 1% Y/Y to 17,837&nbsp;homes and&nbsp;decreased&nbsp;2% in value to $6.7&nbsp;billion.
Homebuilding revenue declined 2% Y/Y&nbsp;to&nbsp;$7.2&nbsp;billion. Homes closed in the quarter fell 1%&nbsp;Y/Y to 19,059&nbsp;homes.
Sales order backlog of homes under contract as of December 31, 2024, decreased&nbsp;21%&nbsp;to 11,003&nbsp;homes and&nbsp;21%&nbsp;in value to&nbsp;$4.3&nbsp;billion.
D.R. Horton had 36,200&nbsp;homes in inventory, of which 25,700&nbsp;were unsold as of December 31, 2024.
Return on equity was&nbsp;19.1%&nbsp;for FY24, and return on assets stood at 13.4%. Operating cash flow stood at $646.7 million&nbsp;in the quarter.
As of December 31, 2024, the cash balance was&nbsp;$3.0&nbsp;billion, and the available capacity on its credit facilities was&nbsp;$3.5 billion, for a total liquidity of&nbsp;$6.5&nbsp;billion.
D.R. Horton repurchased 6.8&nbsp;million shares for&nbsp;$1.1 billion during the quarter. The company&#8217;s remaining stock repurchase authorization as of December-end&nbsp;was&nbsp;$2.5&nbsp;billion.
Subsequent to year-end, the company declared the quarterly dividend of&nbsp;$0.40&nbsp;per share, payable on February 14, to shareholders of record as of February 7, 2025.
FY25&nbsp;Outlook: D.R. Horton reiterated its revenue of&nbsp;$36.0 billion&nbsp;–&nbsp;$37.5 billion&nbsp;versus <a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">the&nbsp;consensus of&nbsp;$37.16 billion</a>.
It expects homes closed to be 90,000 homes-92,000 homes for the year. DHI projects FY25 operating cash flow to be greater than fiscal 2024
The company revised share repurchases outlook to $2.6 billion-$2.8 billion from ~$2.4 billion earlier for FY25. The company expects&nbsp;dividend <a target="_blank" href="https://www.benzinga.com//node/41598041" rel="noreferrer noopener">payments of around&nbsp;$500 million</a>.
David Auld, Executive Chairman, said, &#8220;Although the level of new and existing home inventories has increased from historically low levels, the supply of homes at affordable price points is generally still limited, and demographics supporting housing demand remain favorable.&#8221;
&#8220;Despite continued affordability challenges and competitive market conditions, incentives such as mortgage rate buydowns have helped to address affordability and spur demand.&#8221;
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and&nbsp;Parnassus Income Funds Parnassus Value Select ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PRVS#NYSE">PRVS</a>).
Price Action:&nbsp;DHI shares are up 3.88% at $153.39 premarket at the last check Tuesday.
Read Next:
<ul>
<li><a href="https://www.benzinga.com/news/earnings/25/01/43089069/nasdaq-surges-15-amid-gains-in-tech-stocks-investor-sentiment-improves-but-fear-greed-index-remains-in-fear-zone" target="_blank" rel="noreferrer noopener">Nasdaq Surges 1.5% Amid Gains In Tesla, Nvidia: Investor Sentiment Improves, But Greed Index Remains In &#8216;Fear&#8217; Zone</a></li>
</ul>

Earnings

Equities

Large Cap

Guidance

Dividends

Movers

PRVS

D.R. Horton Q1: Earnings Beat Despite Soft Housing Market, FY25 Outlook Reiterated

A flurry of new data is in and the housing market is flashing mixed signals from builders, buyers and analysts. Here&#8217;s what <a href="https://www.benzinga.com/markets/bonds/25/01/42963973/housing-demand-falls-as-average-30-year-mortgage-rate-above-7">you need to know.</a>
The Data: The Census Bureau and the Department of Housing and Urban Development December<a href="https://www.census.gov/construction/nrc/current/index.html"> housing data</a> released Friday was mixed with housing starts beating expectations while housing completions declined. 
Housing starts jumped 15.8% in December to a seasonally adjusted annual rate of 1.499 million, surpassing the estimate of 1.33 million and rising sharply from November's revised rate of 1.294 million. However, privately-owned housing units authorized by building permits in December declined 0.7% from November's rate of 1.493 million and fell 3.1% compared to December 2023.
Meanwhile, housing completions fell 4.8% in December to 1.544 million, potentially signaling that builders face challenges in finishing projects. Annual housing completions in 2024 rose 12.3% to 1.627 million. 
Read Next: <a href="https://www.benzinga.com/general/health-care/25/01/43041254/unitedhealth-ceo-highlights-hospitals-doctors-pharmas-role-in-soaring-health-care-costs">UnitedHealth CEO Highlights Hospitals, Doctors, Pharma&#8217;s Role In Soaring Health Care Costs</a>&nbsp;
According to <a href="https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index">data released</a> Thursday from the National Association of Home Builders and Wells Fargo, U.S. homebuilders lowered their six-month outlook on prospective sales as buyers are discouraged by rising mortgage rates which crossed over the 7% mark last week.&nbsp;
However, homebuilder sentiment rose in January on optimism about current sales and prospective buyer traffic. The survey also attributed the rise in sentiment to the anticipation of likely more favorable regulatory conditions under the incoming Trump administration. 
Expert Ideas: Analysts from JPMorgan said on Friday that the firm remains optimistic on housing spending, despite surging mortgage rates.&nbsp;
The analysts view consumers as in the "acceptance phase" when it comes to interest rates and expect existing home sales to grind modestly higher, up from 40-year lows.&nbsp;
"More specifically, we believe 30-year mortgage rates being in the high 6 range is ‘okay,'" JPMorgan analysts wrote.&nbsp;
Stocks To Watch: Investors can track the U.S. homebuilders and construction through the IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and the SPDR Series Trust SPDR Homebuilders ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XHB#NYSE">XHB</a>). 
Read Next:&nbsp;
<ul>
<li><a href="https://www.benzinga.com/25/01/43007213/experts-see-the-fed-on-hold-for-now-if-there-are-any-cuts-at-all-in-2025-after-decembers-sticky-consumer-inflation-report">Interest Rate Cuts &#8216;On Hold&#8230; If There Are Any At All In 2025&#8217; After December&#8217;s Sticky Consumer Inflation Report: Economists&nbsp;</a></li>
</ul>
This image was generated using artificial intelligence via MidJourney.

Econ #s

Real Estate

Housing Market: Builders Forge Ahead As Buyers Enter 'Acceptance Phase' On Rates

Fixed-rate mortgage rates have steadily declined, marking a third consecutive week of decrease. Freddie Mac's data shows that 30-year <a href="https://www.benzinga.com/money/mortgages">fixed-rate mortgage</a> now averages 6.60%, significantly lower than the 6.95% rate from a year ago.
"The combination of mortgage rate declines, firm consumer income growth, and a bullish stock market have increased homebuyer demand in recent weeks. While the outlook for the housing market is improving, the improvement is limited given that homebuyers continue to face stiff affordability headwinds," <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-continue-drop-3">noted</a> Sam Khater, Freddie Mac's chief economist.
Fixed-rate mortgages are crucial for many homebuyers, particularly first-time buyers because they offer predictability. Since the interest rate remains constant throughout the loan term, borrowers know their monthly payments regardless of market conditions, making for easier financial planning and buying peace of mind. If these rates continue to drop, this development could make homeownership more accessible, stimulating sales.
<a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales">Recent data</a> reveals that the U.S. housing market is showing signs of recovery. Existing home sales rose 3.5% in October 2024, rebounding from a 14-year low and surpassing market expectations.
However, the median home sales price increased by 4% to $407,200, outpacing November&#8217;s 2.7% inflation rate. While Khater warned about these dynamics, home prices typically rise faster than inflation, which is one reason they were excluded from the Consumer Price Index (CPI) calculation in 1983.
Falling mortgage rates support optimism for the market, which suffered high borrowing costs earlier this year. Furthermore, the National Association of Realtors Chief Economist Lawrence Yun noted increased inventory could further bolster home sales, with job growth and economic expansion supporting growing housing demand.
Still, the home construction market offered mixed results, as shown by broad market ETFs. The iShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) returned 14.66% year-to-date, while the SPDR S&amp;P Homebuilders ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XHB#NYSE">XHB</a>) fared better at 23.06%. The Invesco Building &amp; Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PKB#NYSE">PKB</a>) outperformed with 31.86% — however, it is worth noting that it is by far the smallest and most expensive of the group.
Two notable stocks in the sector performed similarly. KB Home (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBH#NYSE">KBH</a>) has clocked a solid yet underperforming 18.52% return year-to-date. It trades at 8.9x its earnings, significantly lagging the peer average 21.1x.  Meanwhile, Toll Brothers Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TOL#NYSE">TOL</a>) outperformed, climbing 37.39% year-to-date. Still, the firm trades cheaper than its peers at 8.8x its earnings. Following the <a href="https://www.benzinga.com/news/earnings/earnings-beats/24/12/42418066/toll-brothers-investors-may-be-disappointed-with-guidance-analysts-say-after-q4-earnings">latest earnings results</a>, Oppenheimer and JPMorgan reiterated an Outperform and Overweight rating, citing robust demand but warning about the gross-margin guidance for the first quarter of fiscal 2025.
Read Next: • <a href="https://www.benzinga.com/economics/macro-economic-events/24/12/42471357/egg-hyperinflation-could-spike-grocery-prices-why-cal-maine-vital-farms-are-soaring">Egg Hyperinflation Could Spike Grocery Prices: Why Cal-Maine, Vital Farms Are Soaring</a>
Photo: Shutterstock

Economics

PowerShares ETF Trust Dynamic Building &nstruction Portfolio

Mortgage Rates Drop Present Opportunities For Homebuilders

JP Morgan analyst Christopher Horvers maintained an Overweight rating for Lowe&#8217;s Companies, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LOW#NYSE">LOW</a>) <a target="_blank" href="https://www.benzinga.com/quote/LOW/analyst-ratings" rel="noreferrer noopener">with a price forecast of $300.</a>
Yesterday, the company highlighted its near-term and long-term financial targets at its 2024<a target="_blank" href="https://www.benzinga.com/24/12/42445818/lowes-targets-1-billion-in-annual-savings-and-expands-store-footprint-to-drive-future-growth" rel="noreferrer noopener"> Analyst and Investor Conference</a>.
Lowe&#8217;s reaffirmed its outlook, projecting total sales between $83 billion and $83.5 billion<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener"> (consensus estimate: $83.34 billion)</a>.
The company expects comparable sales to decline by 3.0% to 3.5% and adjusted EPS&nbsp;<a target="_blank" href="https://www.benzinga.com/news/earnings/24/11/42060077/lowes-q3-earnings-revenue-and-eps-beat-but-comp-sales-fall-amid-softness-in-bigger-ticket-diy-discretionary-demand" rel="noreferrer noopener">of $11.80 – $11.90 (consensus estimate: $11.89)</a>.
Lowe&#8217;s plans to unveil its next phase of Perpetual Productivity Improvement (PPI) initiatives, projected to deliver approximately $1 billion in annual cost savings.
The analyst writes that Lowe&#8217;s Analyst Day marked a subtle pivot, signaling that the infrastructure built since CEO Marvin Ellison&#8217;s 2018 arrival is now in place.
The analyst says they continue to favor LOW and write that with the shift to positive comps after three years of pullforward spending and housing headwinds, they believe a moderate 1% comp is reasonable.
The analyst views the 10 basis points of operating margin expansion per comp point and the $1 billion stock repurchase assumption as conservative.
Hoovers adds that Lowe&#8217;s is advancing self-help initiatives to boost top-line growth and margins, reducing the performance gap with Home Depot.
The industry&#8217;s duopoly and resistance to Amazon, along with a strong housing-driven long-term outlook, justify its premium valuation, adds the analyst.
Additionally, the recent decline in long-term rates is expected to boost demand, especially as existing home sales remain at 40-year lows, with potential upside from a Fed rate cut, per the analyst.
As the housing market improves, Horvers expects the company to further re-rate, especially with the 2025 guidance uncertainty cleared.
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and&nbsp;VanEck Retail ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/RTH#NASDAQ">RTH</a>).
Price Action: LOW shares are down 1.41% at $264.11 at the last check Thursday.
Read Next:
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<li><a href="https://www.benzinga.com//node/42465586" target="_blank" rel="noreferrer noopener">Gevo And LG Chem Double Down On Ethanol-To-Olefins Tech: Details</a></li>
</ul>
Photo via Shutterstock.

Analyst Color

Price Target

Reiteration

Analyst Ratings

Trading Ideas

Merrill Lynch Retail HOLDRS Trust due 12/31/41

Lowe's Positioned For Growth Amid Cost Savings And Housing Recovery: JP Morgan Analyst

Lowe&#8217;s Companies, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LOW#NYSE">LOW</a>) highlighted its near-term and long-term financial targets at its 2024 <a target="_blank" href="https://www.benzinga.com/pressreleases/24/12/n42432122/lowes-unveils-2025-total-home-strategy-to-drive-long-term-growth-and-market-share" rel="noreferrer noopener">Analyst and Investor Conference today</a>.
The company has introduced a standardized framework to harness generative AI, aimed at improving customer experiences and boosting productivity.
Also, the company launched the U.S. home improvement industry&#8217;s first product marketplace, partnering with new sellers and existing suppliers to expand its online assortment. This initiative strengthens Lowe&#8217;s position as a one-stop shop for all home needs.
Apart from this, in early 2025, Lowe&#8217;s will relaunch MyLowe&#8217;s Pro Rewards, a streamlined loyalty program for small-to-medium Pros.
The program will simplify earning and redeeming rewards, with Pro customers saving 5% daily on eligible purchases when using their MyLowe&#8217;s Pro Rewards Credit Card.
Moreover, Lowe&#8217;s is streamlining large Pro orders with direct supplier system integration, aiming to boost close rates and capture more Pro spend, while relying on suppliers for jobsite delivery.
FY24 Outlook: Lowe&#8217;s reaffirmed its outlook, projecting total sales between $83 billion and $83.5 billion<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener"> (consensus estimate: $83.34 billion)</a>.
The company expects comparable sales to decline by 3.0% to 3.5% and adjusted EPS <a target="_blank" href="https://www.benzinga.com/news/earnings/24/11/42060077/lowes-q3-earnings-revenue-and-eps-beat-but-comp-sales-fall-amid-softness-in-bigger-ticket-diy-discretionary-demand" rel="noreferrer noopener">of $11.80 &#8211; $11.90 (consensus estimate: $11.89)</a>.
Lowe&#8217;s plans to unveil its next phase of Perpetual Productivity Improvement (PPI) initiatives, projected to deliver approximately $1 billion in annual cost savings.
To drive growth, Lowe&#8217;s plans to open 10-15 stores annually in fast-growing U.S. markets, building on recent successes and enhanced space productivity.
The company will also expand its rural assortments to 150 more stores, offering a one-stop shop with enhanced selections in pet, workwear, automotive, and utility vehicles.
Marvin R. Ellison, Lowe&#8217;s chairman, president and CEO, said, &#8220;As we look ahead to the expected recovery in home improvement, we are making investments to position the company for long-term growth. We are evolving our Total Home strategy to help solve our customers&#8217; total home improvement needs with more value and exceptional service,&#8221;&nbsp;&nbsp;
&#8220;At the same time, we&#8217;re building on our momentum with Pros now that we&#8217;ve reached 30% Pro penetration.&#8221;
Goldman Sachs analyst rated the company a Buy rating, <a target="_blank" href="https://www.benzinga.com/quote/LOW/analyst-ratings" rel="noreferrer noopener">with a price target of $276.</a>
The analyst estimates FY24 sales of $83.3 billion, comparable sales of -3.3%, and adjusted EPS of $11.87.
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and VanEck Retail ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/RTH#NASDAQ">RTH</a>).
Price Action: LOW shares are down 0.31% at $269.28 at the last check Wednesday.
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Photo via Shutterstock.

Lowe's Targets $1 Billion In Annual Savings And Expands Store Footprint To Drive Future Growth

A hiring freeze in October lifted market expectations for a Federal Reserve interest rate cuts, providing relief to U.S. <a href="https://www.benzinga.com/news/econ-s/24/11/41684710/us-economy-adds-only-12-000-jobs-in-october-sharply-misses-estimates-as-hurricane-strikes-pummel-hir">stocks after Thursday's decline</a>. 
The U.S. economy added only 12,000 jobs in October, 211,000 fewer than in September. This marked the lowest monthly pace since December 2020 and sharply missed estimates of 113,000.
Market pricing now reflects a full probability of a 25-basis-point rate cut at next week's Federal Reserve meeting, with the likelihood of another cut in December surging to 85%, according to the CME FedWatch tool.
<h2 class="wp-block-heading">Hurricanes, Strikes Knock October Employment Down</h2>
Beyond the dismal October employment figures, which suggest a recession-like scenario, factors such as hurricanes and strikes have significantly disrupted hiring across the nation.
Hurricane Helene hit Florida's Gulf Coast on Sept. 26, followed by Hurricane Milton on Oct. 9, prompting widespread evacuations and disrupting multiple economic sectors.
"It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates," the Bureau of Labor Statistics (BLS) stated in its report.
Additionally, layoffs surged in manufacturing, rising to 46,000 — the highest since 2009, excluding the pandemic months of March and April 2020. "Manufacturing employment decreased by 46,000 in October, reflecting a decline of 44,000 in transportation equipment manufacturing largely due to strike activity," the BLS added.
Despite stagnant job growth in October, the unemployment rate held steady at 4.1%, indicating that businesses remain committed to retaining their workforce.
<h3 class="wp-block-heading">Equity ETFs Rise On Rising Rate-Cut Bets</h3>
<ul>
<li>The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), tracking the S&amp;P 500 index, rebounded 0.7% after Thursday&#8217;s 1.9% slump. </li>
<li>The tech-heavy Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), replicating the Nasdaq 100, was 0.6% higher. </li>
<li>Small caps outperformed, with the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) soaring 1.2%. </li>
<li>The Roundhill Magnificent Seven ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MAGS#NASDAQ">MAGS</a>) rose 1.4%. On Thursday, it tumbled 3.9%, marking the sharpest 1-day drop since late July.</li>
<li>Sector-wise, the Consumer Discretionary&nbsp;Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) led gains, up over 2%, fueled by a 6% post-earnings rally from Amazon.com Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>).</li>
<li>The Direxion Daily AMZN Bull 2X Shares (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZU#NASDAQ">AMZU</a>) skyrocketed by 13%. </li>
<li>Rising expectations for Fed rate cuts fueled gains in real estate industries, with the iShares U.S. Home Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ITB#NYSE">ITB</a>) rising 1.8%. </li>
<li>Semiconductors rebounded after tumbling by 3.9% on Thursday. The iShares Semiconductor ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SOXX#NASDAQ">SOXX</a>) rose 1.6%. Intel Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/INTC#NASDAQ">INTC</a>) was among the best performers following better-than-expected results. </li>
<li>The SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>) – the biggest physically-backed gold ETF – also rose 0.5%, rebounding after Thursday&#8217;s 1.6% decline. </li>
<li>The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), which tracks West Texas Intermediate (WTI) crude performance, gained 1% amid rising geopolitical tensions in the Middle East following Iran&#8217;s retaliatory attack on Israel. </li>
</ul>
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</ul>
Photo: Shutterstock

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MAGS

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SOXX

Select Sector SPDR-Consumer Discretionary

Stocks Rebound After Selloff As October Hiring Slump Fuels Interest Rate Cut Bets: 10 ETFs To Watch Friday

D.R. Horton, Inc.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) shares are trading lower after the company reported&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/10/b41594448/d-r-horton-inc-americas-builder-reports-fourth-quarter-and-fiscal-2024-earnings-and-increases-quar" rel="noreferrer noopener">fourth-quarter results</a>.
Sales fell 5% year-over-year to&nbsp;$10.0 billion, missing the consensus of&nbsp;$10.2 billion.
Net sales orders increased&nbsp;1%&nbsp;to 19,035&nbsp;homes and&nbsp;decreased 2% in value at&nbsp;$7.1 billion.
Homebuilding revenue increased 2% to $9.0 billion. Homes closed in the quarter rose 3% to 23,647 homes.
Sales order backlog of homes under contract as of September 30, 2024, decreased&nbsp;20% to 12,180&nbsp;homes and&nbsp;19% in value to&nbsp;$4.8 billion.
D.R. Horton had 37,400&nbsp;homes in inventory, of which 25,700&nbsp;were unsold as of September 30, 2024.
EPS was&nbsp;$3.92,&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">missing the consensus of&nbsp;$4.17.</a>
Return on equity (ROE) was&nbsp;19.9% for FY24, and homebuilding pre-tax return on inventory (ROI) was 27.8%.
The company&#8217;s operating cash flow totaled&nbsp;$2.2 billion in FY24. As of September 30, 2024, the cash balance was&nbsp;$4.5 billion, and the available capacity on its credit facilities was $3.1 billion, for a total liquidity of&nbsp;$7.6 billion.
D.R. Horton repurchased 3.4 million shares for&nbsp;$561.2&nbsp;million during the quarter. The company&#8217;s remaining stock repurchase authorization as of September 30, 2024,&nbsp;was&nbsp;$3.6 billion.
Subsequent to year-end, the company raised the quarterly dividend by 33% to $0.40 per share. The dividend is payable on November 19, 2024, to shareholders of record as of November 12, 2024.
FY25 Outlook: D.R. Horton expects revenue of $36.0 billion &#8211; $37.5 billion versus the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">consensus of&nbsp;$39.4 billion</a>.
It expects homes closed to be 90,000 homes-92,000 homes for the year. DHI projects FY25 operating cash flow to be greater than fiscal 2024
The company expects&nbsp;dividend payments of around&nbsp;$500 million and share repurchases of ~$2.4 billion.
David Auld, Executive Chairman, said, &#8220;While mortgage rates have decreased from their highs earlier this year, many potential homebuyers expect rates to be lower in 2025. We believe that rate volatility and uncertainty are causing some buyers to stay on the sidelines in the near term.&#8221;
&#8220;To help spur demand and address affordability, we are continuing to use incentives such as mortgage rate buydowns, and we have continued to start and sell more of our homes with smaller floor plans.&#8221;
&#8220;The supply of both new and existing homes at affordable price points is still generally limited, and demographics supporting housing demand are favorable. With a focus on affordable product offerings, 37,400 homes in inventory and continued improvement in our construction cycle times, we are well positioned for fiscal 2025.&#8221;
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and&nbsp;Invesco Building &amp; Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PKB#NYSE">PKB</a>).
Price Action:&nbsp;DHI shares are down 10.2% at $162.00 premarket at the last check Tuesday.
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<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41317881/hurricane-milton-to-deliver-2-5b-blow-to-floridas-homebuilding-sector-goldman-sachs" target="_blank" rel="noreferrer noopener">Hurricane Milton To Deliver $2.5B Blow To Florida&#8217;s Homebuilding Sector, Goldman Sachs Says</a></li>
</ul>

Buybacks

D.R. Horton Misses Q4 Estimates: Rising Inventory, FY25 Outlook Below Consensus Amid Cautious Homebuyers

PulteGroup, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) shares are trading lower after the company <a target="_blank" href="https://www.benzinga.com/pressreleases/24/10/b41446207/pultegroup-reports-third-quarter-2024-financial-results" rel="noreferrer noopener">reported&nbsp;third-quarter results</a>.
Revenue stood at&nbsp;$4.48 billion, beating the consensus of&nbsp;$4.26 billion.
Reported home sale revenues rose&nbsp;12% to&nbsp;$4.3 billion, with higher revenues reflecting a 12% increase in closings to 7,924&nbsp;homes and an average sales price of&nbsp;$548,000 (flat Y/Y).
The gross margin for home sales stood at&nbsp;28.8%, vs. 29.5% a year ago.
Net new orders fell to 7,031&nbsp;from 7,065 homes last year. However, the dollar value of net new orders rose&nbsp;3%&nbsp;to&nbsp;$3.9 billion&nbsp;in the&nbsp;third quarter.
GAAP EPS of&nbsp;$3.35 beat the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">consensus of&nbsp;$3.15</a>.
At the end of the&nbsp;third quarter, the company&#8217;s backlog was 12,089&nbsp; homes, valued at&nbsp;$7.7 billion.
The company ended the year with&nbsp;$1.5 billion of cash and a debt-to-capital ratio of&nbsp;12.3%.
During the quarter, the company repurchased 2.5&nbsp;million of its common shares for&nbsp;$320&nbsp;million, or an average price of&nbsp;$126.05 per share.
Ryan Marshall, PulteGroup President and CEO, said, &#8220;Years of underbuilding has created a structural shortage of homes and correspondingly high home prices, so the Federal Reserve&#8217;s pivot to lowering interest rates provides a powerful tool in helping to address the affordability challenge faced by today&#8217;s homebuyers.&#8221;
&#8220;Given our strong&nbsp;third quarter&nbsp;and nine-month financial results, we are well positioned to deliver a record year of earnings for the Company,&#8221; added Marshall.
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF&nbsp;(BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and&nbsp;SMI 3Fourteen Full-Cycle Trend ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FCTE#NASDAQ">FCTE</a>).
Price Action: PHM shares are down 5.8% at $135.90 at the last check Tuesday.
Image via Shutterstock
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<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41317881/hurricane-milton-to-deliver-2-5b-blow-to-floridas-homebuilding-sector-goldman-sachs" target="_blank" rel="noreferrer noopener">Hurricane Milton To Deliver $2.5B Blow To Florida&#8217;s Homebuilding Sector, Goldman Sachs Says</a></li>
</ul>

FCTE

FTCE

PulteGroup Q3 Beats Estimates: Home Closings Up 12%, CEO Highlights Fed's Role in Addressing Affordability

Hurricane Milton could slow down new home construction in the state of Florida, which could have a negative impact on the overall <a href="https://www.benzinga.com/topic/housing">U.S. housing market.</a>
What Happened: Hurricane Milton has left devastation in the state of Florida that<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/10/41254312/hurricane-milton-descends-on-florida-analysts-warn-of-impact-on-disney-nexteras-flo"> impacts multiple sectors</a> and will take time to clean up and restore portions of the state.
While portions of the cleanup effort will include the rebuilding and repair of existing homes, the hurricane could impact new homes built in Florida.
New home build permits could be delayed in portions of the state, while deliveries and orders could also be delayed on existing new homes. This could add costs to home builders who have large operations in the state of Florida, according to a Bloomberg <a href="https://www.bloomberg.com/news/live-blog/2024-10-10/hurricane-milton-strikes-florida?srnd=homepage-americas&amp;sref=TBDibEcD">report</a>.
The report names Taylor Morrison Home Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TMHC#NYSE">TMHC</a>), PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>), Lennar Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>) and D.R. Horton Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) as the home builders with the highest exposure in Florida.
Read Also: <a href="https://www.benzinga.com/news/24/10/41266095/hurricane-milton-knocks-out-power-for-over-2m-in-florida-nextera-energy-duke-energy-and-tampa-electr">Hurricane Milton Knocks Out Power For Over 2M In Florida, NextEra Energy, Duke Energy, And Tampa Electric Report Major Outages</a>
Why It's Important: Florida accounts for 14% of single-family home permits and ranks second for new homes in the U.S., according to a Bloomberg report.
A <a href="https://constructioncoverage.com/research/cities-investing-most-in-new-housing">report </a>from Construction Coverage highlights Florida as ranking fifth for new home builds. Among the large cities tracked for the most new home builds, Florida has three cities on the list.
Jacksonville ranks third, Orlando ranks seventh and Tampa ranks 12th.&nbsp;
Investors could soon get more details on the impact Hurricane Milton has on new home builds in the state of Florida. Pulte reports quarterly earnings on Oct. 22, Taylor Morrison reports on Oct. 23 and D.R. Horton reports on Oct. 29.
Lennar <a href="https://www.benzinga.com/news/earnings/24/09/40948948/homebuilder-lennar-reports-better-than-expected-q3-results-details">reported quarterly financial results </a>in September with revenue and earnings per share both beating estimates from analysts.
The company reported new orders were up 5% year-over-year to 20,587 homes and deliveries were up 16% year-over-year to 21,516 homes. Lennar reported a backlog of 16,944 homes worth an estimated $7.7 billion.
Outlooks from home builder companies could be conservative or guided down in the coming quarterly results and something investors should closely monitor.
The iShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) holds a basket of home building stocks with D.R. Horton (14.6%), Lennar (11.7%) and Pulte (7.8%) ranking first, second and fourth, respectively, in the fund by assets.
Read Next: 
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<li><a href="https://www.benzinga.com/real-estate/reit/24/09/41036750/new-us-single-family-home-sales-fall-from-prior-month-but-are-up-from-a-year-ago-as-mortgage-rat">New U.S. Single-Family Home Sales Fall From Prior Month — But Are Up From A Year Ago As Mortgage Rates Decline</a></li>
</ul>
Photo: Shutterstock

Markets

TMHC

Florida Is A Top State For New Home Builds — Could Hurricane Milton Slow It Down? 4 Homebuilder Stocks That Could Come Under Pressure

Sales of single-family homes fell last <a href="https://www.benzinga.com/real-estate/24/06/39465243/u-s-home-sales-decline-for-third-month-as-record-prices-pose-persistent-affordability-challenges-dur">month from July </a>but rose from a year ago as mortgage rates kept falling.
New single-family home sales fell 4.7% in August from the prior month to an annualized rate of 716,000, according to estimates released on Wednesday by the U.S. Census Bureau and the Department of Housing and Urban Development.
That was up 9.8% from an annualized rate of 652,000 home sales in August 2023.
The latest month-over-month decline was in contrast to a 10.3% jump in single-family home sales from June to July.
Single-family home sales fell the most from July to August in the West, falling 17.8% to an annualized rate of 152,000 in that region.
Read Also: <a href="https://www.benzinga.com/real-estate/24/06/39398524/home-sales-suffer-third-worst-month-in-the-last-10-years">Home Sales Suffer Third Worst Month In The Last 10 Years</a>
Sales of all homes, which also included condominiums, townhomes and co-ops, slipped 2.5% from July to a seasonally adjusted annual rate of 3.86 million in August, according to latest figures from the National Association of Realtors (NAR). Year-over-year sales for August declined 4.2% from 4.03 million in August 2023.
"Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months," NAR chief economist Lawrence Yun said.
"The home-buying process, from the initial search to getting the house keys, typically takes several months."
The interest rate on a 30-year mortgage fell to a <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/41024067/mortgage-demand-soars-as-fed-interest-rate-cut-fuels-housing-market-revival-next-sp">two-year low of 6.13%</a>, a week after the Federal Reserve cut interest rates by 50 basis points to mark the first Fed rate cut in four years.
Price Action: Lennar Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>), one of the largest homebuilders with a market cap of $49.5 billion, slipped 1.29% to close Wednesday at $181.86.
<ul>
<li>IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) slipped 1.71%</li>
<li>Direxion Daily Homebuilders &amp; Supplies Bull 3X Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NAIL#NYSE">NAIL</a>) fell 4.94%</li>
<li>AdvisorShares Gerber Kawasaki ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GK#NYSE">GK</a>) went up 0.17%</li>
</ul>
Read Now: 
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<li><a href="https://www.benzinga.com/news/large-cap/24/07/39909262/us-home-sales-see-sharpest-monthly-decline-in-1-5-years-as-record-high-prices-keep-buyers-on-the-s">US Home Sales See Sharpest Monthly Decline In 1.5 Years As Record High Prices Keep Buyers On The Sideline</a></li>
</ul>
Photo: Floridastock via Shutterstock

REIT

NAIL

New US Single-Family Home Sales Fall From Prior Month — But Are Up From A Year Ago As Mortgage Rates Decline

New construction on single-family homes in the U.S. <a href="https://www.benzinga.com/news/23/06/32926608/us-housing-starts-skyrocket-to-highest-level-since-2016-sign-of-strong-market-optimism-among-builder">jumped in August</a> as mortgage rates trend downward and the Federal Reserve is expected to cut rates on Wednesday for the first time in four years.
Single-family housing starts last month came in at an annualized rate of 992,000 units, up 15.8% from a revised figure of 857,000 for July, according to Commerce Department data released on Wednesday.
Starts for all privately-owned housing in August totaled an annualized rate of 1.356 million units, up 9.6% from the July revised estimate of 1.237 million and up 3.9% from the August 2023 rate of 1.305 million.
Single-family housing completions reached an annualized rate of 1.029 million in August, registering a 5.6% decline from July&#8217;s revised rate of 1.09 million.
Completions for all privately-owned homes in August were at a seasonally adjusted annual rate of 1.788 million, up 9.2% from the July revised estimate of 1.637 million and 30.2% above the July 2023 rate of 1.373 million.
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37845734/housing-starts-rebound-lift-homebuilder-stocks-sign-of-economic-resilience">Housing Starts Rebound, Lift Homebuilder Stocks: Sign Of Economic Resilience</a>
Building permits also rose last month, Commerce Department data showed.
Single-family authorizations in August were at a rate of 967,000, up 2.8% from the revised July figure of 941,000.
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,475,000. That&#8217;s up 4.9% from the July revised rate of 1.406 million but below the August 2023 rate of 1.578 million.
The average rate for <a href="https://www.benzinga.com/news/24/09/40921345/mortgage-rates-drop-to-2-year-low-refinancing-hits-fastest-pace-since-2022-rocket-lendingtree-among">30-year mortgages</a> fell 14 basis points in the week ended Sept. 13 to 6.15%, marking the lowest rate since September 2022, according to the Mortgage Bankers Association.
The Federal Reserve is <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40921827/fed-decision-is-here-5-things-investors-need-to-know-ahead-of-wednesdays-pivotal-in">expected to lower</a> its key interest rate ranging from 5% to 5.25% on Wednesday by either 25 or 50 basis points, signifying its first rate decline in four years.
Price Action: Homebuilders slid into Wednesday&#8217;s mid-day trading.
<ul>
<li>D.R. Horton, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) slipped 0.86% to $193.67 </li>
<li>Pulte Group (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) declined 0.41% to $139.88</li>
<li>NVR, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVR#NYSE">NVR</a>) went down 0.34% to $9,542.99</li>
</ul>
Exchange-traded funds that hold homebuilder stocks showed gains and losses.
<ul>
<li>IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) declined 0.57%</li>
<li>Direxion Daily Homebuilders &amp; Supplies Bull 3X Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NAIL#NYSE">NAIL</a>) fell 1.8%</li>
<li>Pacer US Cash Cows Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BUL#NYSE">BUL</a>) gained 0.2%</li>
</ul>
Read Now:
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<li>&#8216;<a href="https://www.benzinga.com/real-estate/24/08/40666981/the-time-has-come-to-adjust-cheaper-mortgage-rates-could-be-just-weeks-away-but-it-all-hinges-on-thi">The Time Has Come to Adjust&#8217; — Cheaper Mortgage Rates Could Be Just Weeks Away, But It All Hinges On This Data</a></li>
</ul>
Image: Shutterstock

Single-Family Housing Starts Are Up As Mortgage Rates Decline, Fed Eyes Lower Rates

The U.S. housing market has been tumultuous <a target="_blank" href="https://www.benzinga.com/economics/24/08/40259694/housing-inches-toward-buyers-market-as-mortgage-rates-fall-but-with-one-caveat-report" rel="noreferrer noopener">due to persistent interest rate hikes</a>.
However, an upward revision of<a href="https://www.benzinga.com/news/large-cap/24/08/40639345/traders-scale-back-bets-on-50-basis-point-september-rate-cut-ahead-of-fridays-key-fed-inflation-ga"> U.S. gross domestic product growth</a> in the second quarter has led speculators to reconsider their bets on a substantial 50-basis-point&nbsp;<a href="https://www.benzinga.com/markets/equities/24/08/40627044/us-dollar-oil-prices-tech-stocks-rise-as-gdp-roars-by-3-in-q2-bonds-yen-slip-as-bets-for-large-r" target="_blank" rel="noreferrer noopener">rate cut next month.</a>
With mortgage rates expected to decrease, experts advise homebuyers to act swiftly to secure the best deals before the opportunity closes.
Looking ahead, several dynamic trends are set to shape the housing market.
According to a <a href="https://www.noradarealestate.com/blog/housing-market-forecast-for-next-5-years/" target="_blank" rel="noreferrer noopener">note</a> by Norada Real Estate Investments, the market will remain strong over the next five years, though it will experience some dramatic shifts. Home prices are projected to continue rising, but at a slower pace than in recent years, offering a more gradual increase. While the supply of homes is expected to grow, addressing the previous shortage should ease the inventory crunch that has driven prices up.
Also Read: <a target="_blank" href="https://www.benzinga.com/news/24/08/40230627/a-ton-of-landlords-are-about-to-raise-rents-this-year" rel="noreferrer noopener">A Ton Of Landlords Are About To Raise Rents This Year</a>
Despite the Federal Reserve&#8217;s past rate hikes raising borrowing costs and dampening buyer enthusiasm, a gradual rate decline could rekindle demand and revitalize the market.
However, competition will remain fierce due to robust job growth, population expansion, and limited land availability.
<h3 class="wp-block-heading">2024 Forecast</h3>
The U.S. housing market is anticipated to slow, with home prices either stabilizing or seeing a slight decline. Zillow&#8217;s latest forecast for 2024 projects a 1.8% national increase in home values, indicating a period of market stability, Norada Real Estate Investments added.
Stock Opportunities
As home prices are expected to remain stable or increase modestly, homebuilders are likely to benefit from sustained demand and favorable conditions. This stability should support their revenue growth through ongoing construction and sales.
According to a June report by the<a href="https://www.nahb.org/blog/2024/06/pro-builder-housing-giants"> National Association of Home Builders</a>, the top three homebuilders by revenue, closings, and home types are:
<ul>
<li>D.R. Horton, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>): DHI stock has surged over 58% in the past year. Wells Fargo recently raised its <a href="https://www.benzinga.com/quote/DHI/analyst-ratings" target="_blank" rel="noreferrer noopener">price forecast </a>to $220 from $210 while maintaining an Overweight rating. Investors can consider the iShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) for exposure.</li>
<li>Lennar Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>): LEN stock has risen more than 52% in the past year. Wells Fargo increased its price forecast to $195 from $185, also maintaining an <a href="https://www.benzinga.com/quote/LEN/analyst-ratings" target="_blank" rel="noreferrer noopener">Overweight </a>rating. The AdvisorShares Gerber Kawasaki ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GK#NYSE">GK</a>) offers a way to invest in Lennar.</li>
<li>Toll Brothers, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TOL#NYSE">TOL</a>): TOL stock has jumped over 75% in the past year. Wedbush raised its<a href="https://www.benzinga.com/quote/TOL/analyst-ratings" target="_blank" rel="noreferrer noopener"> price forecast</a> to $148 from $120, keeping a Neutral rating. The Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PEZ#NASDAQ">PEZ</a>) provides investment exposure.</li>
</ul>
Overall, the U.S. housing market is poised for stability this year, with modest price increases and benefits for homebuilders. Prices are projected to rise 3-5% annually through 2029, while mortgage rates are expected to stabilize above pre-pandemic levels, Norada reported. This evolving landscape, marked by a shift towards suburban and rural demand and technological advancements, will require buyers and investors to remain informed and adaptable, the report added.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Read Next:
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<li><a href="https://www.benzinga.com/news/24/08/40649198/housing-market-in-biggest-bubble-of-all-time-warns-reventure-ceo-this-situation-is-not-sustainable" target="_blank" rel="noreferrer noopener">Housing Market In &#8216;Biggest Bubble Of All Time,&#8217; Warns Reventure CEO: &#8216;This Situation Is Not Sustainable&#8217;</a></li>
</ul>

General

PowerShares Dynamicnsumer Discretionary Sector Portfolio

Rate Cuts Coming: Is It The Perfect Time For Homebuyers To Strike Big Deals?

Certain exchange-traded funds, or ETFs, experienced a significant surge following Fed Chair Jerome Powell&#8217;s speech at <a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40529209/jerome-powell-time-has-come-for-interest-rate-cuts-cooling-in-labor-market-unmistakable">the Jackson Hole Symposium</a>.
&#8220;The time has come for policy to adjust,&#8221; Powell said in a speech. 
The reassuring statement regarding upcoming rate cuts sparked a strong rally in the most interest rate-sensitive corners of the stock <a href="https://www.benzinga.com/markets/equities/24/08/40530908/powells-rate-cut-signal-triggers-small-cap-rally-gold-makes-record-highs-dollar-tumbles-7-etfs-o">market during Friday&#8217;s session.</a> Here&#8217;s a look at three of the top-performing industry ETFs on Friday: regional banks, solar, and home builders.
See Also: <a href="https://www.benzinga.com/news/24/08/40532443/strong-economy-doesnt-justify-4-rate-cuts-this-year-how-about-3-what-experts-are-saying">Strong Economy Doesn&#8217;t &#8216;Justify&#8217; 4 Rate Cuts This Year: How About 3? What Experts Are Saying</a>
<h2 class="wp-block-heading">1) Regional Banks</h2>
The SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>) surged 5% by 3:00 p.m. ET, setting up for its strongest session since December 2023. 
Notably, all 141 of its constituents posted gains, underscoring a broad-based rally across the regional banking industry. 
Eagle Bancorp, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EGBN#NYSE">EGBN</a>), United Community Banks Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UCB#NYSE">UCB</a>) and Valley National Bancorp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VLY#NYSE">VLY</a>) were the strongest performers, up 10.6%, 9.6% and 8.7%, respectively.
Regional banks benefit from lower interest rates mainly because borrowing costs go down, resulting in higher loan demand among customers.
Additionally, U.S. regional banks can find a relief from decreased stress on their non-performing exposures, especially in commercial real estate, as reduced borrowing costs can encourage those firms to refinance their debt or invest in their businesses, thereby improving their ability to meet financial obligations.
<h2 class="wp-block-heading">2) Solar </h2>
The Invesco Solar ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TAN#NYSE">TAN</a>) soared 4.6% on Friday, marking its best session since late May 2024. 
Top gainers were Sunnova Energy International Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NOVA#NASDAQ">NOVA</a>) and SolarEdge Technologies Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SEDG#NASDAQ">SEDG</a>) up 13.7% and 12.5%, respectively. 
Solar companies often require substantial upfront capital to finance the development and installation of solar projects. Lower interest rates reduce the cost of borrowing, making it cheaper for these companies to fund their projects.
<h2 class="wp-block-heading">3) Home Builders</h2>
The iShares Home Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ITB#NYSE">ITB</a>) gained 3.8%, on track to close Friday&#8217;s session at fresh record highs. 
Top-performing names within this industry included Builders FirstSource, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BLDR#NYSE">BLDR</a>), Dream Finders Homes, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DFH#NYSE">DFH</a>) and Arhaus, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ARHS#NYSE">ARHS</a>), all screening gains above 7%. 
Increased housing demand due to more affordable mortgage rates and lower financing costs represent tailwinds for the home construction business. 
<h2 class="wp-block-heading">Chart: Regional Banks, Solar Energy, Home Builders Rally</h2>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="459" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234-1024x459.png" alt="" class="wp-image-511618" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234-1024x459.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234-300x135.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234-768x344.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234-1536x689.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23150757/image-234.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Image: <a href="https://bzresearch.myclickfunnels.com/benzinga-pro-content-webinar-registration/?utm_source=BZprocontent082324&amp;t=be2bearmibe3na1">Benzinga Pro</a></figcaption></figure>
The market interpreted Powell&#8217;s remarks as a green light for the first interest rate cut at the imminent September Open Market Committee meeting. However, Powell provided no indications regarding the size of the cut or the future trajectory of interest rates.
Powell paved the way for a turnaround in companies most negatively impacted by the recent surge in interest rates. Markets had already fully priced in a September rate cut and over 85 basis points of cuts by year-end.
&#8220;Fed Chair Jerome Powell was dovish in his Jackson Hole&nbsp;speech&nbsp;today. He didn&#8217;t hedge. He didn&#8217;t push back against market expectations of several rate cuts ahead as we anticipated he might,&#8221; Ed Yardeni, president at Yardeni Research, commented. 
&#8220;Fed Chair Powell took a dovish tone at Jackson Hole, sounding more preemptive on the labor market and locking in a September cut,&#8221; Bank of America economist Aditya Bhave&nbsp;stated. 
Powell &#8220;struck a dovish tone on the labor market and more firmly emphasized that the Fed's tolerance for labor market cooling had reached its limits and any further weakening would be unwelcome," Goldman Sachs economist Jan Hatzius stated. 
Don&#8217;t miss the opportunity to dominate in a volatile market at the <a href="https://www.benzinga.com/events/small-cap/global-small-cap-conference-2024/" target="_blank" rel="noreferrer noopener">Benzinga SmallCAP Conference</a> on Oct. 9-10 at the Chicago Marriott Downtown Magnificent Mile. Get exclusive access to CEO presentations, 1:1 meetings with investors, and valuable insights from top financial experts. Whether you&#8217;re a trader, entrepreneur, or investor, this event offers unparalleled opportunities to grow your portfolio and network with industry leaders. Secure your spot and get your tickets today!
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</ul>

Mid Cap

Small Cap

ARHS

EGBN

NOVA

SEDG

Powell's Dovish Stance Ignites Rally In Stocks Craving Lower Borrowing Costs: 3 ETFs Positioned For Fed Rate Cuts

Jerome Powell's interest rate remarks Friday ignited a rally in stocks, bonds, and commodities, while the U.S. dollar plunged as traders solidified their bets on <a href="https://www.benzinga.com/topic/interest-rates">rate cuts</a>.
Financial markets responded positively to Fed chair Powell&#8217;s remarks at the Jackson Hole symposium, where he said the &#8216;&#8221;time has come <a href="https://www.benzinga.com/etfs/sector-etfs/24/08/40529209/jerome-powell-time-has-come-for-interest-rate-cuts-cooling-in-labor-market-unmistakable">for policy to adjust.&#8221;</a>
The Fed chair said he is more confident the economy is on a sustainable path back to the 2% inflation target, allowing the Fed to finally shift its focus to labor market conditions.
&#8220;We do not seek or welcome further cooling in labor market conditions,&#8221; he said, adding the Fed has &#8220;ample room to respond&#8221; by adjusting its policy should further weakening in labor market conditions occur.
<h3 class="wp-block-heading">7 Key ETFs React To Powell&#8217;s Jackson Hole Speech</h3>
A greenback gauge, as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UUP#NYSE">UUP</a>), tumbled by 0.7% at 11 a.m. ET., extending its weekly decline to 1.4% — the worst performance it has recorded this year.
Driven by expectations of lower interest rates and a weakening dollar, gold prices surged to a new all-time high of $2,530 per ounce following the speech, with the SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>) climbing by 1.1%. 
Wall Street initially rallied before paring back some gains as traders assess the economic outlook.
Small caps, instead, substantially outperformed large-cap indices. The iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) soared 2.9%, on track for its strongest session since July 16. 
Within sectors, real estate stocks rallied, with the Vanguard Real Estate ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>) up 1.8%, hitting the highest levels since September 2022. 
Interest-rate sensitive industries saw significant gains following Powell&#8217;s remarks, with homebuilders, regional banks and miners leading the market.
The SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>) jumped 4.6%, while the iShares U.S. Home Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ITB#NYSE">ITB</a>) climbed 3.2%, and the SPDR S&amp;P Metals &amp; Mining ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XME#NYSE">XME</a>) advanced 1.7%.
Don't miss the opportunity to dominate in a volatile market at the <a href="https://www.benzinga.com/events/small-cap/global-small-cap-conference-2024/">Benzinga SmallCAP Conference </a>Oct. 9-10 at the Chicago Marriott Downtown Magnificent Mile. 
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="440" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232-1024x440.png" alt="" class="wp-image-511163" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232-1024x440.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232-300x129.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232-768x330.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232-1536x660.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/23110937/image-232.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
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Jerome Powell and Wall Street illustration. Photo: Federalreserve/Flickr Photo: Bylolo/Unsplash

PowerShares DB US Dollar Index Bullish Fund

Powell's Rate Cut Signal Triggers Small-Cap Rally, Gold Makes Record Highs, Dollar Tumbles: 7 ETFs On The Move

Toll Brothers, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TOL#NYSE">TOL</a>) CEO Douglas Yearley is expecting the demand for luxury homes <a href="https://www.benzinga.com/news/24/08/40489889/whats-going-on-with-toll-brothers-stock-wednesday">to remain robust</a> into 2025 after his high-end construction company posted solid third-quarter results on Tuesday.
&#8220;With mortgage rates at their lowest point in a year and trending lower, favorable demographics and continuing balance in the supply and demand of homes for sale, we are optimistic that demand for new homes will remain solid through the end of fiscal &#8217;24 and into 2025,&#8221; he said on Wednesday during a conference call with analysts.
He noted that demand was &#8220;uneven&#8221; throughout the quarter as May had a strong start that slowed in June, while July saw the highest demand, particularly in the latter half of the month.
&#8220;We are encouraged by demand trends we are seeing across the country and also across our buyer segments,&#8221; he said.
Demand was especially strong in the states of California, New Jersey, Pennsylvania, South Carolina and in the urban areas of Atlanta, Boise, Las Vegas and Metro D.C., he said.
Toll Brothers posted adjusted EPS of $3.60 that exceeded Wall Street consensus of $3.31 and $2.73 billion in revenue that beat the analyst estimate of $2.71 billion.
Read Also: <a href="https://www.benzinga.com/trading-ideas/previews/24/08/40447261/toll-brothers-q3-earnings-preview-will-kamala-harris-3-million-homes-plan-boost-homebuilde">Toll Brothers Q3 Earnings Preview: Will Kamala Harris&#8217; 3 Million Homes Plan Boost Homebuilder Stocks?</a>
But RBC Capital Markets pointed out that Toll Brothers&#8217; 11% rise in home orders to 2,490 units from a year ago fell well short of its expectation for a 26% jump in orders and Wall Street&#8217;s forecast of a 27% increase in orders. Meanwhile, the company&#8217;s gross margin of 27.6% beat RBC&#8217;s forecast of 26.4% and Street consensus of 26.3%.
&#8220;Net, the miss on orders and beat on GM% were both wider than expected,&#8221; analyst Mike Dahl wrote in a note.
Wedbush Securities noted that Toll Brothers&#8217; orders rose by double-digit percentages in the Midatlantic, South and Mountain regions but fell by single-digit percentages in the North and Pacific regions.
It also pointed out that Toll Brothers&#8217; sales absorption rate, which is the ratio of homes sold to homes available in a market during a period, of 2.1 homes per month was below Wedbush&#8217;s forecast of 2.3 homes per month.
&#8220;We expect absorption to decline to 1.9 orders/month in F4Q24 due to normal seasonality,&#8221; analyst Jay McCanless wrote in a note.
Price Action: Toll Brothers gained 5.62%, to close at $141.03 on Wednesday, along with gains across ETFs in the sector.
<ul>
<li>Invesco Dorsey Wright Consumer Cyclicals Momentum ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PEZ#NASDAQ">PEZ</a>) rose 2.33%.</li>
<li>IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) went up 2.6%.</li>
<li>IShares Focused Value Factor ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FOVL#NYSE">FOVL</a>) gained 0.52%.</li>
<li>Themes US Small Cap Cash Flow Champions ETF (NASDFAQ: SMCF) edged up 0.64%.</li>
<li>SPDR S&amp;P Homebuilders ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XHB#NYSE">XHB</a>) rose 2.9%.</li>
</ul>
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<li><a href="https://www.benzinga.com/news/earnings/24/08/40464067/toll-brothers-likely-to-report-lower-q3-earnings-these-most-accurate-analysts-revise-forecasts-ahea">Toll Brothers Likely To Report Lower Q3 Earnings; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call</a></li>
</ul>
Image created using artificial intelligence via Midjourney.

FOVL

SMCF

Demand For High-End Homes 'Will Remain Solid' Into Next Year, Says Toll Brothers CEO

Homebuilder stocks surged to record highs on Friday, driven by a positive inflation report that cemented expectations for interest <a href="https://www.benzinga.com/topic/interest-rates">rate cuts in September.</a>
The Personal Consumption Expenditure (PCE) price index — commonly referred to as the Fed&#8217;s favorite inflation measure — fell from 2.6% year-on-year to 2.5% in <a href="https://www.benzinga.com/economics/macro-economic-events/24/07/39983210/feds-preferred-inflation-measure-shows-mixed-readings-personal-income-spending-fa">June 2024, matching expectations. </a>
The iShares U.S. Home Construction ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ITB#NYSE">ITB</a>), a key basket tracking U.S. homebuilder equity performances, jumped 3.8%, marking its third consecutive week of gains. 
Chart: U.S. Home Construction ETF Reaches Record Highs
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="441" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50-1024x441.png" alt="" class="wp-image-459652" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50-1024x441.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50-300x129.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50-768x330.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50-1536x661.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/07/26102927/image-50.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Image:<a href="http://www.benzinga.com/pro/register/?utm_source=BZprocontent072624&amp;t=be2bearmibe3na1"> Benzinga Pro </a></figcaption></figure>
Over the past three weeks, U.S. homebuilder stocks have surged by more than 20%, spurred by the anticipation of lower interest rates benefiting rate-sensitive sectors like home construction.
Market participants are now fully pricing in a Federal Reserve rate cut in September, with expectations for at least one more reduction by December 2024. 
&#8220;Homebuilders are trading at the high-end of the&nbsp;historical&nbsp;valuation&nbsp;range, which we think is justified by higher return-on-equity (ROE). On average, we forecast 22% return-on-equity compared to the 2019 level of 20%,&#8221; Bank of America analyst Rafe Jadrosich wrote in a recent report. 
Historically, similar valuation levels in 2018 and 2021 led to sharp pullbacks as the Fed raised rates, Bank of America highlighted. However, the investment bank believes the scenario is different in the second half of 2024, with the Fed likely to begin cutting rates.
On Friday, Bank of America double-upgraded Mohawk Industries, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MHK#NYSE">MHK</a>) from Underperform to Buy and raised their price target from $120 to $177, following better-than-expected Q2 2024 earnings.
<h3 class="wp-block-heading">Top-Performing Homebuilder Stocks In July 2024</h3>
The top ten best-performing stocks in the U.S. Home Construction ETF this month are:
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Name</td>
<td>Price Chg. % (MTD)</td>
</tr>
<tr>
<td>Mohawk Industries, Inc.</td>
<td>37.16%</td>
</tr>
<tr>
<td>M/l Homes, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MHO#NYSE">MHO</a>)</td>
<td>35.92%</td>
</tr>
<tr>
<td>Green Brick Partners, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GRBK#NYSE">GRBK</a>)</td>
<td>31.50%</td>
</tr>
<tr>
<td>American Woodmark Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMWD#NASDAQ">AMWD</a>)</td>
<td>28.44%</td>
</tr>
<tr>
<td>Dream Finders Homes, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DFH#NYSE">DFH</a>)</td>
<td>27.42%</td>
</tr>
<tr>
<td>JELD-WEN Holding, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JELD#NYSE">JELD</a>)</td>
<td>26.80%</td>
</tr>
<tr>
<td>Installed Building Products, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBP#NYSE">IBP</a>)</td>
<td>26.65%</td>
</tr>
<tr>
<td>D.R. Horton, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>)</td>
<td>26.29%</td>
</tr>
<tr>
<td>Tri Pointe Homes, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TPH#NYSE">TPH</a>)</td>
<td>26.26%</td>
</tr>
<tr>
<td>Century Communities, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CCS#NYSE">CCS</a>)</td>
<td>26.05%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">As of July 26, 2024</figcaption></figure>
<h3 class="wp-block-heading">Latest Mortgage Rates, Housing Market Data</h3>
The Mortgage Bankers Association recently reported that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less dropped by 5 basis points to 6.62% for the week<a href="https://www.benzinga.com/news/large-cap/24/07/39931211/mortgage-rates-hit-lowest-point-since-february-as-investors-anticipate-fed-rate-cuts"> ending July 19, 2024.</a>
Despite the easing in borrowing costs, other housing market indicators remain bleak. 
Homebuilder confidence dipped to 42 in July, its lowest reading year-to-date, according to Bank of America.
 Jeffrey Roach, chief economist for LPL Financial, commented on the situation, stating, &#8220;The low supply of homes and high interest rates have depressed affordability to near-term lows.&#8221;
The National Association of Realtors reported a significant 5.4% decline in existing home sales for June, marking the worst monthly drop since 2022. 
Additionally, the U.S. Census Bureau revealed that new single-family home sales fell 0.6% month-over-month to a seasonally adjusted annual rate of 617,000 in June 2024, the lowest in seven months and below forecasts of 640,000, as high prices continued to affect affordability. 
The median sales price of existing homes rose 4.1% year-over-year, setting a new record high.
Now Read:
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<li><a href="https://www.benzinga.com/markets/equities/24/07/39970069/investors-go-all-in-on-small-caps-pour-over-6-billion-into-russell-2000-etf-this-month-they-will">Investors Go All In On Small Caps, Pour Over $6 Billion Into Russell 2000 ETF This Month: They &#8216;Will Return To Larger-Cap Alternatives,&#8217; Veteran Analyst Says</a></li>
</ul>

AMWD

GRBK

JELD

Homebuilder Stocks Rally To Record Highs On Rate-Cut Frenzy But Housing Sales Still Struggle

PulteGroup, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) shares are trading higher after the company reported&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/07/b39901324/pultegroup-reports-second-quarter-2024-financial-results" rel="noreferrer noopener">second-quarter&nbsp;FY24&nbsp;results</a>.
Revenue stood at&nbsp;$4.60 billion, beating the consensus of&nbsp;$4.491 billion.
Reported home sale revenues rose&nbsp;10%&nbsp;Y/Y to&nbsp;$4.4 billion, with higher revenues reflecting an&nbsp;8%&nbsp;Y/Y increase in closings to 8,097 homes and a 2%&nbsp;Y/Y rise in average sales price to $549,000.
The gross margin for home sales stood at&nbsp;29.9%, increasing by 30 basis points Y/Y, in the quarter.
Net new orders fell to 7,649 from 7,947 homes last year. However, the dollar value of net new orders rose 2% year-over-year to $4.4 billion in the second quarter.
GAAP EPS of&nbsp;3.83&nbsp;beat the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">consensus of&nbsp;$3.26</a>.
At the end of the second quarter, the company&#8217;s backlog was 12,982 homes, valued at $8.1 billion. The company ended the year with&nbsp;$1.4 billion&nbsp;of cash and a debt-to-capital ratio of&nbsp;12.8%.
During the quarter, the company repurchased 2.8 million of its common shares for&nbsp;$314 million, or an average price of&nbsp;$113.79&nbsp;per share.
Ryan Marshall, PulteGroup President and CEO, said, &#8220;While interest rate movements can impact short-term homebuying demand, long-term market dynamics continue to benefit from a structural shortage of homes caused by years of underbuilding.&#8221;
&#8220;As demonstrated by our 27.1% return on equity for the past 12 months, we continue to successfully navigate these conditions by actively managing sales price, pace and starts on a community-by-community basis with the goal of realizing high returns on invested capital and equity over time.&#8221;
Yesterday, the company disclosed that Bob O&#8217;Shaughnessy, Executive Vice President, and Chief Financial Officer, plans to <a target="_blank" href="https://www.benzinga.com/pressreleases/24/07/b39880849/pultegroup-cfo-bob-oshaughnessy-announces-plan-to-retire-in-2025" rel="noreferrer noopener">retire at the end of 2025</a>.
PulteGroup has appointed Jim Ossowski, currently Senior Vice President of Finance, as the replacement.
Investors can gain exposure to the stock via&nbsp;IShares U.S. Home Construction ETF&nbsp;(BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) and&nbsp;Invesco Building &amp; Construction ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PKB#NYSE">PKB</a>).
Price Action: PHM shares were up&nbsp;2.61%&nbsp;at&nbsp;$128.92 premarket&nbsp;at last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Midjourney

Home Construction Company PulteGroup's Q2 Revenue and Earnings Soar Despite Rising Interest Rates: Details

Wall Street is currently witnessing the &quot;Great Rotation&quot; with investors shunning hot technology stocks in favor of smaller companies and other sectors. The combination of the Trump trade resurgence and the growing expectations of the Fed cutting rates in September has led to the rotation in the market.
The Dow Jones Industrial Average, which was underperforming, has gained 2.3% over the past week, outperforming the S&amp;P 500 and the Nasdaq Composite Index, which shed nearly 0.7% and 2.2%, respectively. The Russell 2000 small-cap index has risen 3.4% in a week. Value investing is also being favored by investors as it involves buying stocks or other financial assets that are believed to be undervalued or trading below their intrinsic worth.
Chances of Donald Trump winning in November have risen steadily in recent weeks. Trump favors higher tariffs, particularly on imports from China, that could potentially hurt semiconductor stocks. Technology names, which powered the bull market this year, have lost their sheen lately.
Trump prefers more deregulation, which will benefit the health insurance, energy and financial industries as well as small-cap companies. Proposed extensions of corporate and personal tax cuts could increase budget deficits and result in higher government borrowing. Consequently, longer-dated bond yields have surged lately, steepening the yield curve.
Inflation in the United States cooled in June to the slowest pace since 2021, spiking the bets for rate cuts as soon as possible. Fed Chairman Jerome Powell&#39;s latest comment that the Fed wouldn&#39;t wait for inflation to get to its 2% target before it began cutting rates also lent support to the rate cut bets. According to the CME FedWatch tool, traders now see a 100% chance of the Fed lowering rates in September.
Pint-sized companies have a higher level of debt, and lower rates generally lead to reduced borrowing costs. This helps small businesses to expand their operations more easily and results in increased profitability. A rate cut after two years of tightening would be a big relief for banks, which have been struggling with the impact of high rates on their profits and their borrowers. While lower rates can compress net interest margins for banks, it will encourage lending and potentially lead to increased consumer and business loan activity.
High-dividend-yield sectors such as utilities and real estate will be the biggest beneficiaries of rate cuts, given their sensitivity to interest rates. This is especially true as these offer higher returns due to their outsized yields. In real estate, lower rates can boost housing market activity by making mortgages more affordable.
Given the great rotation, some ETFs, which were depressed this year, have started to gain momentum and hit new 52-week highs in the latest trading session. We have highlighted them in detail below:
Invesco S&amp;P SmallCap 600 Pure Value ETF (ARCA:RZV) &ndash; 52-Week High: $110.00
Invesco S&amp;P SmallCap 600 Pure Value ETF offers exposure to the stocks of companies that exhibit strong value characteristics by tracking the S&amp;P SmallCap 600 Pure Value Index. It holds 143 stocks in its basket, with key holdings in financials, consumer discretionary and industrials sectors.
Invesco S&amp;P SmallCap 600 Pure Value ETF has AUM of $254.6 million and trades in an average daily volume of 12,000 shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
Financial Select Sector SPDR Fund (ARCA:XLF) &ndash; 52-Week High: $44.11
Financial Select Sector SPDR Fund ETF seeks to provide exposure to 71 companies in diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. It follows the Financial Select Sector Index, charging investors 9 bps in fees per year.
Financial Select Sector SPDR Fund is an ultra-popular ETF with AUM of $43 billion and trades in an average daily volume of 34 million shares. It carries a Zacks ETF Rank #1 (Strong Buy).
iShares U.S. Home Construction ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/itb#BATS">ITB</a>) &ndash; 52-Week High: $118.66
iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index.
With an AUM of $2.8 billion, iShares U.S. Home Construction ETF holds a basket of 44 stocks, with a heavy concentration on the top two firms. The product charges 40 bps in annual fees and trades in a heavy volume of around 2 million shares a day, on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #3.
iShares U.S. Real Estate ETF (ARCA:IYR) &ndash; 52-Week High: $94.88
iShares U.S. Real Estate ETF offers exposure to the country&#39;s real estate companies and REITs, which invest in real estate directly and trade like stocks. It follows the Dow Jones U.S. Real Estate Capped Index. iShares U.S. Real Estate ETF holds a basket of 71 securities with key holdings in telecom tower REITs, industrial REITs and retail REITs. It has amassed $3.4 billion in its asset base while trading in a heavy volume of 4.2 million shares a day on average.
iShares U.S. Real Estate ETF charges 40 bps in annual fees and has a Zacks ETF Rank #3.
Vanguard Mega Cap Value ETF (ARCA:MGV) &ndash; 52-Week High: $124.31
Vanguard Mega Cap Value ETF follows the CRSP US Mega Cap Value Index, which measures the performance of the largest value stocks in the U.S. market. It holds 134 stocks in its basket, with key holdings in financials, healthcare, industrials and technology sectors.
Vanguard Mid-Cap Value ETF has amassed $8 billion and trades in an average daily volume of 170,000 shares. It charges 7 bps in fees per year and has a Zacks ETF Rank #1 with a Medium risk outlook.
<a href="https://www.zacks.com/stock/news/2305429/5-etfs-making-the-most-of-the-great-market-rotation?cid=CS-BENZ-FT-etf_news_and_commentary-2305429">To read this article on Zacks.com click here.</a>

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