3 Housing Stocks to Buy on the Dip By StockNews

Housing has been one of the strongest parts of the economy over the past year. However, the sector has experienced some profit-taking over the past month, setting up a buying opportunity. 3 housing-related stocks to consider buying on the dip are Hovnanian Enterprises (NYSE:), Tempur Sealy International (NYSE:), and Industrie Natuzzi (NTZ).One of the most remarkable developments of the past year has been strength in the housing market. Going into the coronavirus, conditions were favorable due to low rates and low inventory. However, the pandemic resulted in rates moving even lower and a surge in demand as people were eager to move out of cities and into suburbs and rural areas. Of course, a contributing factor was the increase in remote work which gave people more flexibility in choosing a location.

As a result, it’s not surprising that the S&P CoreLogic Case-Schiller 20 City Home Price Index rose by 12% over the past 15 months to reach, new all-time highs. This is confirmed by anecdotal evidence as there are bidding wars for homes all across the country. This strength is also reflected in homebuilders, as the SPDR S&P Homebuilders ETF (XHB) which is up more than 200% since the March 2020 stock market bottom.

However, since early May, housing stocks have weakened as XHB is down about 12% since its high on May 10. While there are some indications that the housing market’s momentum is slowing, longer-term fundamentals remain supportive. Simply put, the housing market will continue to expand albeit at a slower pace than the prior year. Therefore, investors should use recent weakness as a buying opportunity and target high-quality stocks such as Hovnanian Enterprises (HOV), Tempur Sealy International (TPX), and Industrie Natuzzi (NTZ).

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