The Fed's Plan Is Playing Out in Homebuilders

Here's how the sector rates… Published By Money & Markets, LLC. October 30, 2024 Published By Money & Markets, LLC. October 30, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( The Fed's Plan Is Playing Out in Homebuilders Money & Markets Daily, It’s long been said that one key to the American dream is homeownership. I’m not sure I subscribe to that, as I have never owned a home. My previous career as a journalist kept me moving around, making buying a home somewhat unnecessary. Since transitioning out of journalism, mortgage rates kept me from pulling the trigger. And I’m OK with that. However, millions of Americans go on the hunt for a new home every year … whether they are moving to a new city or upgrading. Since 2020, when the Federal Reserve started its aggressive round of interest rate hikes, mortgage rates have prevented many Americans from realizing their dream. More and more people are living paycheck to paycheck, unable to save for the 10% downpayment needed to buy a home. But things are starting to look up for those still eyeing that dream… --------------------------------------------------------------- [Turn Your Images On]( [America's Enemies Set to Unleash — WFD — Weapon of Financial Destruction]( In the coming months, America will face a weapon unlike any other — a Weapon of Financial Destruction (WFD). Our enemies are ready to use it to collapse our economy, freeze our financial systems, and ruin the lives of millions. But this didn’t come out of nowhere — it’s all part of [a greater plan]( that was foretold in ancient prophecy. [Click now to see how this WFD will unfold and what you can do to protect yourself over the next 12 months.]( --------------------------------------------------------------- New Home Sales Start to Perk Up If you are searching for a new home, you have options. You can buy an existing home that someone else is selling, or you can build a brand-new home with all the custom amenities you’re looking for. When the Federal Reserve cut back its benchmark lending rate by 50 basis points in September, mortgage and lending rates started to follow suit, making it more attractive for prospective homebuyers to build what they wanted. [Turn Your Images On] According to the U.S. Census Bureau, in September, new home sales increased to 738,000 on an annualized basis… well above consensus expectations of 720,000. That’s the highest it’s been since March 2024. At the same time, existing home sales failed to improve — falling 1% in September to 3.84 million on an annualized rate. This suggests a few things: - Right now, new homebuyers are more apt to spend their money building what they want rather than finding something already on the market. - Current homeowners are still hesitant to sell and exchange their current low-rate mortgage for a higher one on a new loan. [Turn Your Images On] So mortgage rates have come down, and existing home sales aren’t following suit … but new home sales are. This is providing a boom for homebuilding stocks. --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Paradigm Press. [Last second candidate for President]( With just days remaining until the election… [This former hedge fund manager]( just threw his name on the ballot! He’s not a registered Republican or Democrat… And he just made [a shocking prediction about this election](. Make sure you watch this ASAP… --------------------------------------------------------------- Homebuilding Stocks Turning Up The SPDR S&P Homebuilders ETF (NYSE: XHB) holds a basket of some of the biggest stocks in the homebuilding industry. XHB Up 68% In the Last 12 Months [Turn Your Images On] In the last 12 months, XHB has jumped 68%, compared to the S&P 500 return of just 22% over the same time. That led me to some additional analysis using Adam’s Green Zone Power Ratings system. I ran XHB through what we call an ETF X-ray, examining all of the holdings and obtaining an average overall rating according to Adam's system. XHB Rates “Bullish” [Turn Your Images On] There are 34 holdings in XHB — 25 of which rate 72 or higher overall. That gives XHB an X-ray average of a "Bullish" 79 out of 100 on Green Zone Power Ratings. Highlights of the X-ray: All but one stock in XHB rates above 70 on quality, while 28 rate above 70 on Growth and 22 rate above 70 on Momentum. We can dive into historical price change to further illustrate the strength of homebuilders over time: [Turn Your Images On] As you can see, over varying timeframes, homebuilding stocks continue to consistently outperform the S&P 500. What It Means: Buying a home has been out of reach for many Americans because of high mortgage rates and a lack of existing supply. However, since the Fed trimmed back its benchmark lending rate, homebuying activity is starting to pick up … especially in new home construction. Existing supply will still lag demand, and with the Fed poised to potentially cut rates further in the future, things look bright for homebuilder stocks. That’s all from me today. Until next time… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [BEAT "ANALYSIS PARALYSIS" AND THE MARKET]( - [TSLA’S BIG DAY + THE FED’S NEXT MOVE]( - [DON'T WAGER ON THESE 2 SPORTS BETTING STOCKS]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, 702 Cathedral Street, Baltimore, MD 21201. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. 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Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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