10 Best Residential Real Estate Stocks To Buy

1. D.R. Horton, Inc. (NYSE:DHI)

Number of Hedge Fund Holders: 62

D.R. Horton, Inc. (NYSE:DHI) is an American home builder selling homes in 113 markets across 33 states in the country. Other than homebuilding, it offers other services such as mortgage, title, and insurance. D.R. Horton has Express Series for first-time homebuyers, Emerald Series for high-end homes, and Freedom Series for easy living and low maintenance. For those who cannot own a home, the company offers rental communities.

D.R. Horton, Inc. (NYSE:DHI) has been America’s largest home builder by volume since 2002 which makes it a market leader. On September 30, 2023, the home builder was found to be the largest builder in 3 of the top 5 US housing markets and in 52 of the 118 markets in which it operated. During the trailing twelve months ended June 30, the firm closed 94,255 homes. The firm’s diverse product offerings and price points in the current market also offer a competitive advantage.

During the fiscal third quarter, the firm recorded earnings per share of $4.10, up 5% year-over-year. Home sales revenues of $9.2 billion were secured on 24,155 homes closed in the quarter. With affordable offerings and flexible lot supply in a housing market that is a victim of decades of underbuilding, D.R. Horton, Inc. (NYSE:DHI) is well-positioned to grow and perform well.

The firm is in a strategic relationship with Forestar, a public residential lot development company that is a majority-owned subsidiary of D.R. Horton. In the third quarter, $270 million of the finished lots the firm purchased were from Forestar. Forestar’s robust balance sheet and ample lot supply position them well enough to capitalize on the shortage of finished lots in the homebuilding market.

Based on clear market dominance, robust financials, and demographics supporting housing demand, DHI ranks among the 10 best residential real estate stocks to buy. The stock was held by 62 hedge funds, as of Q2 2024. Greenhaven Associates was the largest shareholder in the company.

While we acknowledge the potential of DHI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than DHI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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