Home builders face a tougher cyclical environment
The guest argued that home building stocks have peaked and are facing a more difficult environment due to high interest rates and the need to offer buyer incentives.
The argument
The speaker noted that top home building stocks have been making lower highs and lower lows since late 2024. While they are watching the sector for a potential cyclical entry if prices become deeply depressed, they are currently avoiding new allocations.
The thesis, stress-tested
✓ What validates it
- ✓Home builder stocks continuing to make lower lows
- ✓Further compression in home builder margins due to persistent rate pressures
▸ Risks discussed
- ▸A deep correction in stock prices could trigger a broader economic slowdown
- ▸Rising unemployment could eventually injure the housing market further
Hear it yourself
"But if you look at a chart, of some of the best run home building stocks, there's they made their highs eighteen months ago, September 2024, and they still they just keep making lower highs, lower lows."
00:00 / 00:14
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE