Barron's

It isn’t a great time to buy a home. It could be a good time to buy builder stocks.

The clouds gathering around builder shares have darkened as investors fret the spring home buying season will be imperiled by the combination of high home prices and high mortgage rates—despite some recent easing in rates.

Builder stocks sold off at the end of 2024 as mortgage rates rose. The scant home-sales data available for this year so far has done little to put investors’ concerns to rest. Contract signings for both new and existing homes sagged in January, with the latter dropping to the lowest level on record.

“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market,” Lawrence Yun, the National Association of REALTORS®’ chief economist, said in a statement. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”

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