Each month Wedbush publishes its Top 25 report which looks at home sales, home listings, and median sales prices as published by local Realtors’ Associations. Because homebuilder pricing power is a function of city-level real estate economics, the firm believes its Top 25 report can be a useful barometer of home price appreciation trends as well as a read on existing home listings which are the main competitors for our homebuilder coverage.
In an effort to narrow it down, 24/7 Wall Street is taking a look at the major trends presented in this report as well as the top 4 picks that Wedbush made.
Overall, May’s home sales increased 2.1% year over year versus a 1.5% year over year gain for the Top 25 and versus a -5.5% reading in March. Wedbush believes that easier comparisons along with lower mortgage rates are pushing the comps higher.
On the inventory front, homes for sale in the Top 25 markets increased 8.2% year over year in May versus a 9.5% year over year increase in April. The firm continues to believe homebuilder pricing power is being pressured by the increased competition, and the slowing rate of growth in existing homes for sale should be incrementally positive for the group.
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As a result, Wedbush issued a few ratings for homebuilders.
Beazer Homes USA, Inc. (NYSE: BZH) has an Outperform rating with a $17 price target, implying an upside of 78.9% from the most recent closing price of $9.50. Shares were last seen at $9.57, with a 52-week range of $8.16 to $16.08. The consensus analyst price target is $17.00.
Century Communities, Inc. (NYSE: CCS) was given an Outperform rating with a $33 price target, implying an upside of 25.7% from the most recent closing price of $26.25. Shares were last seen at $26.46, with a 52-week range of $16.35 to $33.80. The consensus analyst price target is $33.33.
Lennar Corp. (NYSE: LEN | LEN Price Prediction) has an Outperform rating with a $62 price target, implying an upside of 28.0% from the most recent closing price of $48.43. Shares were last seen at $48.35, with a 52-week range of $37.29 to $55.77. The consensus analyst price target is $59.00.
Taylor Morrison Home Corp. (NYSE: TMHC) was given an Outperform rating with a $24 price target, implying an upside of 18.2% from the most recent closing price of $20.31. Shares were last seen at $20.85, with a 52-week range of $14.73 to $22.02. The consensus analyst price target is $23.13.
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