In this article, we discuss 11 best housing stocks to buy in 2022. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Housing Stocks To Buy In 2022.
2021 was a great year for selling a home but the market was not ideal for home buyers, since prices rose sharply and the number of homes for sale declined. Even though the housing market in 2022 will continue to benefit the sellers, it offers a relatively improved chance for individuals to purchase their dream homes.
According to Lawrence Yun, chief economist at the National Association of Realtors, the housing market in 2022 will have a good run, but he does not expect the performance to exceed last year’s. He expects more inventory in the coming months, owing to new housing construction and struggling mortgage payers selling their properties.
Danielle Hale, the chief economist at Realtor.com, expects home sales to increase another 6.6% in 2022 and home prices to rise 2.9% on top of 2021 levels. Although people will face rising home prices and higher mortgage rates, they will still lean towards buying homes since rents are also projected to increase by 7.1% in 2022. Home shoppers will also benefit from higher incomes and workplace flexibility, which will allow them to relocate to affordable areas. Prospective homeowners are encouraged to lock in their housing deals before the Fed administers upcoming interest rate hikes, so they can benefit from lower mortgage rates. New inventory in the market will also alleviate competition.
The housing market is set to experience a positive environment in 2022, and the most notable housing stocks include Builders FirstSource, Inc. (NYSE:BLDR), The Home Depot, Inc. (NYSE:HD), and Zillow Group, Inc. (NASDAQ:Z), among others discussed in detail below.
Our Methodology
We selected the housing stocks which received positive ratings from analysts in the last few weeks and were popular among the hedge funds tracked by Insider Monkey in the third quarter of 2021.
These companies offer construction services, building materials, and home improvement goods. We included real estate investment trusts as well, to give potential investors a well-rounded look into the housing market.
breno-assis-r3WAWU5Fi5Q-unsplash
Best Housing Stocks To Buy In 2022
11. UDR, Inc. (NYSE:UDR)
Number of Hedge Fund Holders: 20
UDR, Inc. (NYSE:UDR) is a Colorado-based real estate investment trust which is a leading apartment manager in the United States, with rental properties across California, Florida, Maryland, Massachusetts, Texas, and more.
UDR, Inc. (NYSE:UDR) declared on December 16 a $0.3625 per share quarterly dividend, in line with previous. The dividend was paid on January 31, to shareholders of record on January 10.
In a press release on February 8, UDR, Inc. (NYSE:UDR) announced a Q4 FFO of $0.63, beating consensus estimates by $0.09. The company’s revenue of $348.21 million was up 15.2% year-on-year, exceeding estimates by $9.58 million.
Mizuho analyst Vikram Malhotra on January 20 raised the price target on UDR, Inc. (NYSE:UDR) to $66 from $61 and kept a Buy rating on the shares. After outperforming the S&P 500 Index in 2021, the REIT sector faces a “tricky macro set-up” in 2022, the analyst told investors in a research note, saying “lofty” valuations and “resilient, but modestly decelerating” fundamentals imply multiple contraction risk.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 20 funds were bullish on UDR, Inc. (NYSE:UDR), down from 24 funds in the quarter earlier. Zimmer Partners held the biggest stake in UDR, Inc. (NYSE:UDR) as of September 2021, with 3.6 million shares worth $194.70 million.
In addition to Builders FirstSource, Inc. (NYSE:BLDR), The Home Depot, Inc. (NYSE:HD), and Zillow Group, Inc. (NASDAQ:Z), UDR, Inc. (NYSE:UDR) is one of the best housing stocks to buy in 2022.
10. Taylor Morrison Home Corporation (NYSE:TMHC)
Number of Hedge Fund Holders: 23
Headquartered in Scottsdale, Arizona, Taylor Morrison Home Corporation (NYSE:TMHC) is one of the biggest home building companies which designs mid-to-upscale housing across multiple states. Taylor Morrison Home Corporation (NYSE:TMHC) on December 13 approved the repurchase of up to $250 million of the company’s common stock through June 30, 2024.
On February 8, Taylor Morrison Home Corporation (NYSE:TMHC) reported earnings for the fourth quarter. The company posted an EPS of $2.19, surpassing estimates by $0.12. Revenue over the period jumped roughly 61% year-on-year to $2.51 billion, but missed estimates by $91.65 million.
B. Riley analyst Alex Rygiel raised the price target on Taylor Morrison Home Corporation (NYSE:TMHC) to $45 from $40 and kept a Buy rating on the shares on February 9, following the Q4 results.
In the third quarter database of Insider Monkey, 23 hedge funds were long Taylor Morrison Home Corporation (NYSE:TMHC), with stakes equaling $233 million. Miller Value Partners held the leading stake in the company as of Q3 2021, owning 2.75 million shares, worth approximately $71 million.
9. Skyline Champion Corporation (NYSE:SKY)
Number of Hedge Fund Holders: 26
Skyline Champion Corporation (NYSE:SKY) is one of the largest homebuilders in North America, offering manufactured homes, ADUs, park-model RVs, and modular housing sectors for families, the hospitality industry, seniors, and the working class.
Craig-Hallum analyst Greg Palm raised the price target on Skyline Champion Corporation (NYSE:SKY) on February 4 to $111 from $103 and kept a Buy rating on the shares. Skyline Champion Corporation (NYSE:SKY) is positioned to take advantage of rising rates and inflation, and estimated revisions and valuation levels support a much higher stock price, even if overall market conditions remain choppy, the analyst told investors in a bullish thesis.
Skyline Champion Corporation (NYSE:SKY) announced its Q4 results on February 2, posting earnings per share of $1.18, exceeding estimates by $0.45. Revenue for the period gained 41.61% year-on-year, reaching $534.69 million, outperforming estimates by $35.89 million.
MAK Capital One was the biggest stakeholder of Skyline Champion Corporation (NYSE:SKY) as of Q3 2021, with 3 million shares worth $180 million. Overall, 26 hedge funds held long positions in Skyline Champion Corporation (NYSE:SKY) in the third quarter, up from 23 funds in the quarter earlier.
Like Builders FirstSource, Inc. (NYSE:BLDR), The Home Depot, Inc. (NYSE:HD), and Zillow Group, Inc. (NASDAQ:Z), Skyline Champion Corporation (NYSE:SKY) is a popular housing stock among smart investors.
Here is what Wasatch Global Investors has to say about Skyline Champion Corporation (NYSE:SKY) in its Q2 2021 investor letter:
“Moreover, we think our high-quality companies are better able to deal with supply-chain challenges and raise prices while still maintaining or increasing market share in an inflationary environment. For example, Skyline Champion Corp. (SKY)—which constructs affordable homes and modular buildings—was able to raise prices continually as lumber costs rose. And now that lumber costs are falling, home prices are steady or increasing so the company’s margins are expanding. Skyline has most of the business characteristics that we find ideal, including: (1) strong revenue and earnings growth with continued headroom; (2) rising margins; (3) a reasonable stock price; and (4) significant potential over time for investors to pay higher and higher price/earnings multiples on the stock.”
8. Masco Corporation (NYSE:MAS)
Number of Hedge Fund Holders: 29
Masco Corporation (NYSE:MAS) is an American producer of cabinetry, plumbing, and decorative architectural products for the home improvement and construction sectors.
Masco Corporation (NYSE:MAS) reported on February 8 its Q4 results, posting an EPS of $0.67, missing estimates by $0.02. The $2.02 billion revenue outperformed market consensus by $71.66 million.
KeyBanc analyst Kenneth Zener on February 9 lowered the price target on Masco Corporation (NYSE:MAS) to $72 from $79, owing to the second half of 2022 cost pressure, keeping an Overweight rating on the shares.
According to the Q3 database of Insider Monkey, 29 hedge funds were bullish on Masco Corporation (NYSE:MAS), down from 35 funds in the preceding quarter. 40 North Management held the largest stake in Masco Corporation (NYSE:MAS) as of Q3 2021, with 1.85 million shares worth $102.7 million.
Here is what Ariel Fund & Ariel Appreciation Fund has to say about Masco Corporation (NYSE:MAS) in its Q3 2021 investor letter:
“Conversely, branded home improvement and building products manufacturer Masco Corp. (MAS) was the greatest detractor from relative performance in the period. We believe this price action runs counter to the strength of the long-term fundamentals in the business. Despite investor concerns related to supply chain cost pressures, Masco Corporation (NYSE:MAS) continues to deliver financial and operating results ahead of consensus, while returning capital to shareholders via buybacks. Near term, we believe Masco Corporation (NYSE:MAS) is well positioned to capitalize on growing interest in do-it yourself home enhancement. Looking ahead, we expect the company to enhance its operating profitability, as it continues to benefit from scale, technological know-how and the positioning of its supply chain.”
7. NVR, Inc. (NYSE:NVR)
Number of Hedge Fund Holders: 32
NVR, Inc. (NYSE:NVR) is a Virginia-based home construction company that also offers mortgage banking and title services. Hedge funds were bullish on NVR, Inc. (NYSE:NVR) in the third quarter of 2021, with 32 funds holding long positions in the company, up from 28 funds in the quarter earlier.
On February 8, KeyBanc analyst Kenneth Zener raised the price target on NVR, Inc. (NYSE:NVR) to $5,700 from $5,450 and kept an Overweight rating on the shares, citing raised earnings expectations. The analyst noted that NVR, Inc. (NYSE:NVR)’s manufacturing process delivers the highest returns, with lower than peer gross margin expansion, and is relatively defensive versus others in a down-cycle.
Ric Dillon’s Diamond Hill Capital was the leading stakeholder of NVR, Inc. (NYSE:NVR) in Q3 2021, with 118,816 shares worth approximately $570 million. Hedge funds are piling into NVR, Inc. (NYSE:NVR), just like Builders FirstSource, Inc. (NYSE:BLDR), The Home Depot, Inc. (NYSE:HD), and Zillow Group, Inc. (NASDAQ:Z).
Here is what Ensemble Capital Management has to say about NVR, Inc. (NYSE:NVR) in its Q4 2021 investor letter:
“While the United States needs to build about 1.3 million new housing units a year just to keep up with demographic demand and replace homes that are torn down, we have built far fewer than that ever since the housing bust of over a decade ago. Now, with demand for homes surging, yet builders are constrained due to supply chain and labor issues, companies like NVR are struggling to build new homes as fast as buyers are demanding them. While NVR’s stock was strong all year, news flow in the home building industry during the fourth quarter pointed to continued strong gross margins as record high selling prices boosted results. NVR’s stock rallied 23% in the quarter to close out the year.
While Ensemble’s investment strategy is focused on owning companies that are already deeply competitively advantaged, we know that what really matters is that our companies remain competitively advantaged in the future. Competitive moats erode over time unless they are diligently and proactively maintained. So, we focus on identifying companies that have strong competitive positioning and which we believe will maintain those advantages over time.
The fact is that investors don’t get paid for observing how the world stands today. They get paid for correctly understanding how the world will evolve over time. If a company starts off with ultra-high competitive advantages, but has them diminished to just strong competitive advantages is likely to see its stock underperform as investors assign less value to the company. On the other hand, a company that starts off with moderate competitive advantages, but works to improve their positioning so they display strong competitive advantages, is likely to see its stock outperform as investors recalibrate the valuation, they assign the company to reflect the stronger positioning.”
6. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 33
Headquartered in Southfield, Michigan, Sun Communities, Inc. (NYSE:SUI) is a real estate investment trust with a portfolio of assets including manufactured housing communities, recreational vehicle resorts, and marinas.
On December 1, Sun Communities, Inc. (NYSE:SUI) declared a quarterly dividend of $0.83 per share, in line with previous. The dividend was paid on January 18, to shareholders of record on December 31.
Citi analyst Nicholas Joseph resumed coverage of Sun Communities, Inc. (NYSE:SUI) on November 30 with a Buy rating and a $225 price target after the acquisition of Park Holidays worth $1.3 billion and completed $740 million forward equity raise. The analyst is “generally supportive of the accretive acquisition” but does see some risks associated with Sun Communities, Inc. (NYSE:SUI)’s overall business strategy.
Among the hedge funds tracked by Insider Monkey, 33 funds held long positions in Sun Communities, Inc. (NYSE:SUI), up from 30 funds in the preceding quarter. Echo Street Capital Management held the largest stake in Sun Communities, Inc. (NYSE:SUI), with more than 1 million shares worth $187.3 million.
Here is what ClearBridge Mid Cap Strategy has to say about Sun Communities, Inc. (NYSE:SUI) in its Q3 2021 investor letter:
“Our commitment to constantly improve the risk/reward of the portfolio kept us active during the third quarter in repositioning to capitalize on opportunities we have previously sourced and de-risked. We initiated a position in Sun Communities, a U.S. real estate investment trust (REIT) that specializes in investing in manufactured housing communities, recreational vehicle (RV) resorts and marinas. As the economy works through housing supply constraints, Sun’s manufactured housing communities are increasingly appealing to younger, lower income populations in prime growth locations through the Sun Belt. Additionally, Sun’s expanded RV park offerings have seen healthy demand from increasing numbers of retiring baby boomers purchasing RVs as well as greater numbers of road trips in the wake of COVID-19.”
Click to continue reading and see 5 Best Housing Stocks To Buy In 2022.
Suggested articles:
- 11 Best Liquor Stocks to Buy Right Now
- 10 Stocks Redditors are Buying for 2022
- 10 Best Stocks Under $20 According to Jim Simons’ Fund
Disclosure: None. 11 Best Housing Stocks To Buy In 2022 is originally published on Insider Monkey.
