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3 Real Estate Stocks to Buy as Mortgage Rates Start to Cool Down
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Mortgage rates have subsided for two weeks in a row, and it seems that rate cuts are finally taking effect. As of Jan. 30, the average rate on a 30-year mortgage in the United States eased to 6.95% from last week, when it had closed at 6.96%. A month ago, the 30-year fixed mortgage rate was at 6.99%. Borrowing costs on 15-year fixed-rate mortgages also came down this week. The average rate dropped to 6.12% from 6.16% last week.
Mortgage rates usually follow how the bond market reacts to the Fed’s interest rate policy. In September 2024 when the first rate cut was announced, average rate on a 30-year mortgage briefly fell to a 2-year low just above 6%, but has been mostly rising since then. This upward trend in rates can be linked to long-term bond yields and renewed investor interest. Specifically, the 10-year Treasury is seen as the biggest influence on mortgage rates.
However, lower mortgage rates were prevalent even before the Fed started cutting rates. This is because long-term bond yields are also guided by the anticipation of multiple rounds of cuts to the short-term Fed funds rate, a possible six to eight cuts from September 2024 to deep into 2025. Now that the Fed’s December meet has indicated only a couple of cuts in 2025, all eyes will be on the mortgage rates’ reaction to it.
While existing home sales rose in December for the third month in a row and new home sales also increased, pending home sales retracted 5.5% in December, following four consecutive months of increases.
Yet, there might be better times ahead for home buyers. The inventory of properties on the market has been increasing. The number of homes for sale across the country is up nearly 25% this month from a year ago, according to Realtor.com. A higher inventory of homes would bring prices further down, luring first-time buyers. One must, thus, start considering parking part of their investments in promising stocks in the sector.
Our Picks
The stocks below flaunt a Zacks Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FirstService Corporation (FSV - Free Report) provides residential property management and other essential property services.
FirstService has an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for its next-year earnings has improved 1.1% over the past 60 days. FSV has a VGM Score of B.
Jones Lang LaSalle Incorporated (JLL - Free Report) is a commercial real estate and investment management company.
Jones Lang LaSalle has an expected earnings growth rate of 83.8% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the past 60 days. JLL carries a VGM Score of B.
Brookfield Infrastructure Partners L.P. (BIP - Free Report) is an owner and operator of critical global infrastructure networks.
Brookfield has an expected earnings growth rate of 4.8% for the current year. The Zacks Consensus Estimate for its next-year earnings has improved 3% over the past 60 days. BIP has a VGM Score of B.
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3 Real Estate Stocks to Buy as Mortgage Rates Start to Cool Down
Mortgage rates have subsided for two weeks in a row, and it seems that rate cuts are finally taking effect. As of Jan. 30, the average rate on a 30-year mortgage in the United States eased to 6.95% from last week, when it had closed at 6.96%. A month ago, the 30-year fixed mortgage rate was at 6.99%. Borrowing costs on 15-year fixed-rate mortgages also came down this week. The average rate dropped to 6.12% from 6.16% last week.
Mortgage rates usually follow how the bond market reacts to the Fed’s interest rate policy. In September 2024 when the first rate cut was announced, average rate on a 30-year mortgage briefly fell to a 2-year low just above 6%, but has been mostly rising since then. This upward trend in rates can be linked to long-term bond yields and renewed investor interest. Specifically, the 10-year Treasury is seen as the biggest influence on mortgage rates.
However, lower mortgage rates were prevalent even before the Fed started cutting rates. This is because long-term bond yields are also guided by the anticipation of multiple rounds of cuts to the short-term Fed funds rate, a possible six to eight cuts from September 2024 to deep into 2025. Now that the Fed’s December meet has indicated only a couple of cuts in 2025, all eyes will be on the mortgage rates’ reaction to it.
While existing home sales rose in December for the third month in a row and new home sales also increased, pending home sales retracted 5.5% in December, following four consecutive months of increases.
Yet, there might be better times ahead for home buyers. The inventory of properties on the market has been increasing. The number of homes for sale across the country is up nearly 25% this month from a year ago, according to Realtor.com. A higher inventory of homes would bring prices further down, luring first-time buyers. One must, thus, start considering parking part of their investments in promising stocks in the sector.
Our Picks
The stocks below flaunt a Zacks Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FirstService Corporation (FSV - Free Report) provides residential property management and other essential property services.
FirstService has an expected earnings growth rate of 7.9% for the current year. The Zacks Consensus Estimate for its next-year earnings has improved 1.1% over the past 60 days. FSV has a VGM Score of B.
Jones Lang LaSalle Incorporated (JLL - Free Report) is a commercial real estate and investment management company.
Jones Lang LaSalle has an expected earnings growth rate of 83.8% for the current year. The Zacks Consensus Estimate for its current-year earnings has improved 1.7% over the past 60 days. JLL carries a VGM Score of B.
Brookfield Infrastructure Partners L.P. (BIP - Free Report) is an owner and operator of critical global infrastructure networks.
Brookfield has an expected earnings growth rate of 4.8% for the current year. The Zacks Consensus Estimate for its next-year earnings has improved 3% over the past 60 days. BIP has a VGM Score of B.