D.R. Horton, Inc. (DHI) is the nation’s largest homebuilder; it constructs and sells single-family detached homes and attached homes, such as townhomes, duplexes, triplexes, and condominiums, notes growth stock expert Brit Ryle, editor of The Wealth Advisory.
The company also buys and develops the land that the homes are built on. D.R. Horton operates in 26 states and 78 markets in the U.S.
Everyone had been down on homebuilders. Everyone said the housing market stunk. But we did the research and saw that sales had been dropping about as fast as inventory. The reason people weren’t buying was because there weren’t any houses for them to buy.
This drove prices up and brought homebuilders back into action. Prices are still on the rise, and existing inventories aren’t enough to fill growing demand. I expect to see much more growth from DHI within the short and medium term.
After a short rally following stellar earnings, DHI and the rest of the homebuilders headed down because of negative headlines. Mortgage rates are on the rise as the Fed hikes the interest it charges banks to borrow. And that has investors afraid that people will stop buying homes.
But we have to keep in mind that, historically, rates are still very low. People have financed homes for much more. Double digits weren’t unheard of 30 years ago. And yet, people didn’t give up on their dreams of owning a home. And that won’t happen now, either.
Sure, you’ll pay more over the long run. But it won’t be that much more on each monthly payment. And it won’t stop Americans from buying homes. I expect that we’ll keep seeing weakness with these negative headlines. But once the facts behind them start to come to light, investors will flock to homebuilders.
We have a growing economy, and it’ll translate into a booming housing market. Buying shares on dips will set you up for massive gains as the market kicks into full swing. The limit price is now $55, and the 12-month target price is still $70.
