With rising demand and the cooling of inflation, homebuilding stocks are expected to surge in 2023.
- Keybanc Capital Markets analyst Kenneth Zener says the homebuilding sector will continue to grow in 2023 and outrun the S&P 500 Index.
- Zener has been correct on his calls of homebuilders warning in January that the stocks will fall and predicting a comeback in September.
- “I have never been more optimistic that homebuilders will outperform the market on a relative basis,” he says.
Why it’s news
Keybanc Capital Markets analyst Kenneth Zener predicted the fall of homebuilders’ stocks in January and then the rise in September of this year, and now he is stating that the stocks will continue to rise in 2023.
The S&P Supercomposite Homebuilding Index fell 27% from January through Zener’s September call, while the S&P 500 dropped about 15%. Since his pivot, builders have risen about 17% while the broader market is lower by about 1%, according to Bloomberg writers Breanna Bradham and Norah Mulinda.
Interest rates for homes have skyrocketed this year to slow inflation costs. The rising rates caused homebuilder stocks to plummet. Home prices were also rising considerably, but are beginning to cool down, causing stocks to rise again.
Homebuilder stock prices are rising, and many analysts are watching as they expect the prices to continue to surge.
“We think investing in high return on inventory builders will generate better risk-adjusted stock returns,” Zener said in his September housing note.