In 2020, the housing market is poised to keep up 2019’s momentum as economic growth and low interest rates signal positive trends in housing, despite flattened home prices. Investor’s Business Daily (IBD) also reports that housing stocks are expected to perform well, especially those that have pivoted to entry-level homes.
Ken Leon, CFRA Research's Global Director of Industry and Equity Research told IBD that the strong economy is one reason why housing demand will remain strong.
"The foundation for a strong housing market is driven by employment growth, higher household income, and high consumer confidence levels," Leon told IBD. "We're also seeing the secular change to millennial households beginning to acquire their first homes."
For potential buyers, realtor.com senior economist George Ratiu believes buying a home in 2020 will be a "mixed bag".
"It will offer more opportunities for some as the supply of new homes begins to offset inventory pressure that has built over the last four years, interest rates remain reasonable and home prices flatten," he told IBD. "The broad price moderation will continue to make midsize markets in the Midwest and South attractive."
IBD also noted which stocks investors should keep an eye on the most. Wedbush Securities analyst Jay McCanless is bullish on homebuilder stocks going into 2020, IBD notes.
"We think investors who are already in the homebuilders should maintain their positions, and for some of these names that are outperform-rated for us that have had a pullback, whether its Century Communities (CCS) after their earnings report or Taylor Morrison (TMHC) when they declined on the announcement of the William Lyon Homes (WLH) (acquisition) deal, we feel those are good buying opportunities," he told IBD.
Leon is also optimistic about housing stocks, noting stocks such as Taylor Morrison and MDC Holdings.