Sharp rise due to heightened expectations for “interest rate cuts”! Check out the notable stocks in the US real estate sector!

Housing construction stocks have been rising since the beginning of this month due to expectations of a decline in mortgage interest rates and expectations for interest rate cuts by the US Federal Reserve (Fed). Investors will re-read the US housing market from financial results and a series of data to be announced this week.

Since the latest US inflation data fell short of expectations, the market is betting on the possibility that the US Federal Reserve (Fed) will begin cutting interest rates in September. As a result, real estate stocks rose drastically. Investors flocked to home construction stocks, digital-related stocks, and commercial real estate stocks, and real estate stocks became one of the best-performing sectors in the S&P 500, and turnover surpassed the 30-day average by about 30%.

The housing market not only affects household spending and savings, but also has a major impact on the economy as a whole. During periods of high inflation, rising housing costs are putting pressure on many households. However, according to current data, housing inflation has begun to ease, and there is no doubt that the economic burden on households will be reduced.

Additionally, there is a possibility that rising expectations of interest rate cuts will lead to a further rise in real estate stocks. Interest rate cuts usually mean lower borrowing costs, so they will stimulate housing demand and in turn boost the real estate market.

It should be noted that all brands in the same sector (excluding installed building products and Toll Brothers) have hit record highs in this range.

Earlier, Goldman Sachs chief economist Jan Hatzius said that the US real estate market may be in a “2 in 1 out” phase. However, the current situation is that if housing inflation eases, economic pressure on households will drop drastically. Meanwhile, there is a possibility that rising interest rate reduction expectations will stimulate real estate stock appreciation. This is because reduction in borrowing costs due to interest rate cuts is expected to boost housing demand and the market.

Meanwhile, Houghton Housing Executive Chairman David Old stated in a statement, “While inflation and mortgage interest rates remain high, the supply of affordable new and used housing is still limited, the demographic situation that supports housing demand is good, and although economic strength is still an issue, demand from home buyers for the spring sales season is good.”

According to FactSet, analysts expect the Part Group's earnings to increase from 3.27 dollars per share at 4.5 billion dollars and 3.21 dollars per share at 4.2 billion dollars in the same period last year. It is estimated that the company handed over 8,041 homes to buyers and recorded 8,437 new orders. The company estimates that the number of housing deliveries to buyers is 8,041, and the number of new sales contracts is 8,437.

As the consumer price index in June fell short of expectations, investors expected lower mortgage interest rates and reduced margin pressure, boosting home construction stocks earlier this month. According to Dow Jones Market Data, iShares US Housing Construction Traded Fund has risen more than 14% this month, making it the monthly performance since December last year.

Due to falling interest rates, the BofA Global Research analyst team raised the Parth Group's target share price from 135 dollars to 138 dollars. BofA Global Research analysts Ralph Jadrosić, Victoria Piskalev, and Shawn Karnan said on Monday, “The Palt Group reaffirms its purchase because it is one of the strongest return on equity prospects in our entire construction industry and has achieved consistent capital returns.” I described it.

The stock price of the Part Group has risen 21% since the beginning of this year, and recently it is 125 dollars per share.

Finally, Katrina Odachenko, a political strategist with a real estate license in Maryland, said, “If Mr. Trump is re-elected, it could have a big impact on the real estate market. During his first term, Trump made efforts to increase the number of homeowners, extended the ban on evictions during the epidemic, and proposed the privatization of Fannie Mae and Freddie Mac.”

Trump's 2024 election campaign included several initiatives related to the real estate market and construction industry based on the policies of the previous period.

Overall, interest rates and the housing market often perform well in the Republican administration, and I think there is relatively no doubt that this will happen if Mr. Trump is re-elected.