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US Mortgage Rates Drop to a New Low in 2024! 3 Big Gainers
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Affordability issues have largely impacted home buyer’s sentiments all through the year. Their incomes were also stretched due to elevated interest rates, a frustration for the housing market. However, with interest rate cut expectations growing, mortgage rates dropped to their lowest level this year.
With mortgage rates sliding, things are hunky-dory for PulteGroup, Inc. (PHM - Free Report) , KB Home (KBH - Free Report) and Toll Brothers, Inc. (TOL - Free Report) making them enticing buys.
Mortgage Rates Fall Under 6.5%
For the week ending on Aug 22, the most sought-after 30-year fixed-rate mortgage slipped to its lowest level since May 2023. The 30-year fixed mortgage average rate was 6.46%, down from last week’s 6.49%, according to Freddie Mac.
Similarly, the average rate on the 15-year fixed-rate mortgage slipped again this week, an encouraging development for probable house hunters. The rate on a 15-year loan averaged 5.62%, down from 5.66% in the prior week, added Freddie Mac.
Image Source: Freddie Mac
To top it off, the average rate on the 30-year and 15-year fixed-rate mortgages fell noticeably in over a year. The average rate for 30-year and 15-year fixed mortgages was 7.23% and 6.55%, respectively, a year ago, per the government-sponsored enterprise.
Why Are Mortgage Rates Falling?
Growing expectations of a long-awaited interest rate cut as early as September are pushing the yields on long-term bonds lower, which in turn is dragging mortgage rates downward.
Fed minutes from the Jul 30-31 meeting recently showed that most central bank officials have agreed that a September interest rate cut would be appropriate as inflationary pressure has ebbed.
Moreover, weakness in the U.S. labor market, with 818,000 fewer jobs being added in the 12 months ending in March, has further raised hopes that the Fed will dial back its aggressive monetary policy as early as possible. Market participants now seek further interest rate cut hints from Fed Chair Jerome Powell at the Jackson Hole Symposium (read more: Jackson Hole Event is Bullish for Stocks: HCA, RCL, GM to Gain).
Anyhow, 75.5% of traders are now pricing in a 25 basis points interest rate cut at the September policy meeting, with many expecting at least two rate cuts this year, per CME FedWatch Tool (read more: Tamed Inflation Bolsters September Rate Cut: PHM, MU, ATO to Gain).
Image Source: CME Group
Drop in Mortgage Rates Are a Boon for PHM, KBH, TOL
The steady decline in mortgage rates should motivate potential homebuyers, a blessing in disguise for homebuilders. What’s more, with millennials about to settle into a family life, demand for a suitable home is all set to rise. Interestingly, existing home sales increased by 1.3% to an annual rate of 3.95 million in July, per the National Association of Realtors.
PulteGroup is involved in homebuilding businesses in the United States. PulteGroup’s balanced operational model improved its revenues and earnings.
The Zacks Consensus Estimate for PHM’s current-year earnings has increased almost 4% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 14%.
KB Home
KB Home is an established homebuilder in the United States. The company’s solid pricing strategy helped KB Home’s shares to gain considerably this year.
The Zacks Consensus Estimate for KBH’s current-year earnings has increased 2.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 19.2%.
Toll Brothers
Toll Brothers builds single-family detached and attached homes. The company’s land acquisition stratagems and build-to-order model led to Toll Brothers’ growth.
The Zacks Consensus Estimate for TOL’s current-quarter earnings has increased 1.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 14.2%.
Shares of PulteGroup, KB Home, and Toll Brothers have gained 25.2%, 30.9% and 37.4%, respectively, year to date.
Image Source: Zacks Investment Research
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US Mortgage Rates Drop to a New Low in 2024! 3 Big Gainers
Affordability issues have largely impacted home buyer’s sentiments all through the year. Their incomes were also stretched due to elevated interest rates, a frustration for the housing market. However, with interest rate cut expectations growing, mortgage rates dropped to their lowest level this year.
With mortgage rates sliding, things are hunky-dory for PulteGroup, Inc. (PHM - Free Report) , KB Home (KBH - Free Report) and Toll Brothers, Inc. (TOL - Free Report) making them enticing buys.
Mortgage Rates Fall Under 6.5%
For the week ending on Aug 22, the most sought-after 30-year fixed-rate mortgage slipped to its lowest level since May 2023. The 30-year fixed mortgage average rate was 6.46%, down from last week’s 6.49%, according to Freddie Mac.
Similarly, the average rate on the 15-year fixed-rate mortgage slipped again this week, an encouraging development for probable house hunters. The rate on a 15-year loan averaged 5.62%, down from 5.66% in the prior week, added Freddie Mac.
Image Source: Freddie Mac
To top it off, the average rate on the 30-year and 15-year fixed-rate mortgages fell noticeably in over a year. The average rate for 30-year and 15-year fixed mortgages was 7.23% and 6.55%, respectively, a year ago, per the government-sponsored enterprise.
Why Are Mortgage Rates Falling?
Growing expectations of a long-awaited interest rate cut as early as September are pushing the yields on long-term bonds lower, which in turn is dragging mortgage rates downward.
Fed minutes from the Jul 30-31 meeting recently showed that most central bank officials have agreed that a September interest rate cut would be appropriate as inflationary pressure has ebbed.
Moreover, weakness in the U.S. labor market, with 818,000 fewer jobs being added in the 12 months ending in March, has further raised hopes that the Fed will dial back its aggressive monetary policy as early as possible. Market participants now seek further interest rate cut hints from Fed Chair Jerome Powell at the Jackson Hole Symposium (read more: Jackson Hole Event is Bullish for Stocks: HCA, RCL, GM to Gain).
Anyhow, 75.5% of traders are now pricing in a 25 basis points interest rate cut at the September policy meeting, with many expecting at least two rate cuts this year, per CME FedWatch Tool (read more: Tamed Inflation Bolsters September Rate Cut: PHM, MU, ATO to Gain).
Image Source: CME Group
Drop in Mortgage Rates Are a Boon for PHM, KBH, TOL
The steady decline in mortgage rates should motivate potential homebuyers, a blessing in disguise for homebuilders. What’s more, with millennials about to settle into a family life, demand for a suitable home is all set to rise. Interestingly, existing home sales increased by 1.3% to an annual rate of 3.95 million in July, per the National Association of Realtors.
Given the positives, astute investors should invest in fundamentally sound housing stocks for striking returns. These stocks flaunt a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
PulteGroup
PulteGroup is involved in homebuilding businesses in the United States. PulteGroup’s balanced operational model improved its revenues and earnings.
The Zacks Consensus Estimate for PHM’s current-year earnings has increased almost 4% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 14%.
KB Home
KB Home is an established homebuilder in the United States. The company’s solid pricing strategy helped KB Home’s shares to gain considerably this year.
The Zacks Consensus Estimate for KBH’s current-year earnings has increased 2.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 19.2%.
Toll Brothers
Toll Brothers builds single-family detached and attached homes. The company’s land acquisition stratagems and build-to-order model led to Toll Brothers’ growth.
The Zacks Consensus Estimate for TOL’s current-quarter earnings has increased 1.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 14.2%.
Shares of PulteGroup, KB Home, and Toll Brothers have gained 25.2%, 30.9% and 37.4%, respectively, year to date.
Image Source: Zacks Investment Research