In this article, we will discuss the 13 Best Housing Stocks to Buy According to Hedge Funds.
As per the US Bank, the US economy is heavily dependent on the housing market. Low affordability, higher mortgage rates, slowness in the activity as well as recent price declines in some of the markets raise questions about the direction of the real estate market and its impact on the broader economy, homeowners, and investors. The firm also believes that housing-related expenditures account for 15%-18% of the US GDP. Additionally, real estate accounts for the nation’s largest share of household assets.
What Lies Ahead for the Housing Market?
The US Bank believes that, moving forward, higher incomes and potentially cheaper mortgage rates might help balance some of the tension between elevated supply and low affordability. According to Bill Merz, head of capital markets research at U.S. Bank Asset Management Group, the Fed rate cuts can help bring mortgage rates lower. If mortgage rates fall and real income growth remains strong, this can support housing demand and help in mitigating higher supply, opines Merz.
Amidst such trends, we will now have a look at the 13 Best Housing Stocks to Buy According to Hedge Funds.
Our Methodology
To list the 13 Best Housing Stocks to Buy According to Hedge Funds, we used a screener to shortlist the stocks catering to the broader housing sector. After getting an extensive list, we chose the ones popular among hedge funds, as of Q2 2025. Finally, the stocks are arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
13 Best Housing Stocks to Buy According to Hedge Funds
13. Dream Finders Homes, Inc. (NYSE:DFH)
Number of Hedge Fund Holders: 15
Dream Finders Homes, Inc. (NYSE:DFH) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 2, the company announced pricing of its private offering of $300 million aggregate principal amount of 6.875% senior unsecured notes due 2030. Dream Finders Homes, Inc. (NYSE:DFH) anticipates the net aggregate proceeds of the offering to be ~$295 million, post underwriting discount and estimated offering expenses payable. It plans to use the net proceeds for repaying a portion of the borrowings outstanding under its existing revolving credit facility and for the general corporate purposes.
In Q2 2025, Dream Finders Homes, Inc. (NYSE:DFH) saw strong performance, with homebuilding revenues touching $1.1 billion, largely consistent with the prior-year quarter, while home closings grew by 10% and net sales went up by 13%. Dream Finders Homes, Inc. (NYSE:DFH) believes that the acquisition of Alliant Title further enhanced vertical integration, while expanding its financial services capabilities and offerings.
12. Green Brick Partners, Inc. (NYSE:GRBK)
Number of Hedge Fund Holders: 18
Green Brick Partners, Inc. (NYSE:GRBK) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 10, Morningstar noted that James Hardie Building Products Inc. announced the renewal of its relationship with Green Brick Partners, Inc. (NYSE:GRBK). The new 3-year agreement solidifies Hardie® siding and trim products as the exclusive choice for new developments by Green Brick Partners, Inc. (NYSE:GRBK) through 2028.
With Green Brick Partners, Inc. (NYSE:GRBK)’s emphasis towards creating distinctive housing developments and James Hardie’s commitment to innovation, the exclusive agreement makes sure that every home built as part of Green Brick Partners, Inc. (NYSE:GRBK)’s developments features the proven strength, durability, and design flexibility. The company’s Q2 2025 performance was resilient despite the softer housing market and highlights the strength of its land acquisition and self-development strategy. New homes delivered rose 5.6% YoY to 1,042 units, a record for any second quarter.
Green Brick Partners, Inc. (NYSE:GRBK) is a diversified homebuilding and land development company.
11. Hovnanian Enterprises, Inc. (NYSE:HOV)
Number of Hedge Fund Holders: 18
Hovnanian Enterprises, Inc. (NYSE:HOV) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 11, the company announced that its wholly owned subsidiary, K. Hovnanian Enterprises, Inc., priced an offering of $450 million aggregate principal amount of 8.000% Senior Notes due 2031 and $450 million aggregate principal amount of 8.375% Senior Notes due 2033 in the private placement. Elsewhere, Hovnanian Enterprises, Inc. (NYSE:HOV) released its Q3 2025 results, wherein it met or exceeded the guidance range for all the metrics provided.
Hovnanian Enterprises, Inc. (NYSE:HOV) addressed the affordability headwinds with higher incentives, which resulted in the first YoY increase in quarterly contracts per community this fiscal year. Consistent with its short-term strategy, the company is selling through some of the lower margin homes and land so that it can make newer land purchases with better margins. Hovnanian Enterprises, Inc. (NYSE:HOV) opines that consumers continue to adjust to current home prices and mortgage rates. Hovnanian Enterprises, Inc. (NYSE:HOV) is confident that the combination of pent-up housing demand and favourable long-term demographic trends for housing will fuel higher demand for new homes.
Hovnanian Enterprises, Inc. (NYSE:HOV) is engaged in designing, constructing, marketing, and selling residential homes.
10. LGI Homes, Inc. (NASDAQ:LGIH)
Number of Hedge Fund Holders: 20
LGI Homes, Inc. (NASDAQ:LGIH) is one of the Best Housing Stocks to Buy According to Hedge Funds. On August 27, Citizens JMP lifted the price target on the company’s stock to $85 from $75, while keeping an “Outperform” rating, as reported by The Fly. As per the firm, the company has a plan to deal with reduced demand while remaining profitable and managing leverage. The firm further finds the stock’s valuation attractive. In Q2 2025, LGI Homes, Inc. (NASDAQ:LGIH) delivered 1,323 homes at an average sales price of $365,446, leading to $483.5 million in revenue.
Furthermore, its gross margin and adjusted gross margin rose 190 bps sequentially to 22.9% and 25.5%, respectively. LGI Homes, Inc. (NASDAQ:LGIH) continues to pursue opportunities for cost savings and improved efficiency, while focusing on fueling additional improvement in the profit margins and EPS. LGI Homes, Inc. (NASDAQ:LGIH) is confident in the broader housing market’s long-term outlook, thanks to the healthy demographics and a structural shortage of new homes.
River Road Asset Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Another poor performer was LGI Homes, Inc. (NASDAQ:LGIH), the 15th largest homebuilder in the U.S. specializing in entry-level homes for first-time buyers. The stock rallied in Q3 on the prospect of lower mortgage rates due to several projected rate cuts by the Fed. After the U.S. presidential election, the Fed reversed course and interest rates increased, and LGIH began to lag the market. LGIH’s Q3 2024 results exceeded expectations despite ongoing affordability challenges for homebuyers. Home sales revenue rose mainly due to an increase in the average sales price (ASP) to $371k, up 5.2% year-over-year. Home closings for the quarter totaled 1,757 homes, flat compared to the prior year but up 6% sequentially. LGIH reduced its expected closings for fiscal year (FY) 2024 to 6,100-6,400 homes from the initial 7,000 8,000 range, while raising gross margin expectations. Amid a U.S. housing shortage estimated at two-to-four million homes, we believe prioritizing margins over volume is the right strategy for LGIH, which has spent the last two years building its inventory of developed lots and raw land. Q3 gross margins were flat year-over-year in stark contrast to industry peers who reported gross margin declines, particularly at the entry-level segment. Active community count grew 30% year-over-year and 8% sequentially to 138, positioning the company to meet its year-end target of 150 active communities and significantly increase home closings in FY 2025. We took no action on the position.”
9. Installed Building Products, Inc. (NYSE:IBP)
Number of Hedge Fund Holders: 21
Installed Building Products, Inc. (NYSE:IBP) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 8, the company announced the acquisition of Carolina Precision Fibers ACP, LLC, doing business as Carolina Precision Fibers. With Installed Building Products, Inc. (NYSE:IBP)’s existing manufacturing operations at Advanced Fiber Technology in Bucyrus, Ohio, CPF enhances its access to an environmentally responsible and versatile product, which acts as an alternative to fiberglass insulation in residential applications as well as several innovative commercial and industrial applications.
Installed Building Products, Inc. (NYSE:IBP) opines that increasing the direct access to material used in installation service is beneficial to business operations and financial results. Including the previously announced acquisitions, CPF, and 3 smaller acquisitions, that have operationally combined with existing branches, Installed Building Products, Inc. (NYSE:IBP) acquired ~$39 million in annual revenue to date in 2025. While the company expects housing affordability to remain challenging in the near term, it remains confident about the long-term fundamentals of the broader US housing industry and the effectiveness of its growth-focused capital allocation strategy.
Giverny Capital Asset Management, LLC, an investment management company, recently published its Q4 2024 investor letter. Here is what the fund said:
“Installed Building Products, Inc. (NYSE:IBP), purchased in 2022. IBP is a prosaic business, installing fiberglass insulation into new homes, apartment buildings and commercial structures. The key to its success is that fiberglass is manufactured in super-heated furnaces that cannot be turned on and off efficiently. When a manufacturer opens a plant, it produces fiberglass 24 hours a day, 365 days a year. The producers need large customers to absorb those volumes, and they grant those buyers significant discounts. We believe IBP buys fiberglass for about 20% less than smaller customers do. Not even giant homebuilders like DR Horton or Pulte can command the discounts IBP receives, as IBP installs insulation in about 30% of all newly built US homes.
As a result, IBP says it can install insulation in a new home, including labor, for less than a homebuilder can buy the fiberglass. Further, most big homebuilders are trying to reduce their permanent workforce, moving more work to subcontractors. To complement its insulation offering, IBP has been acquiring other types of installers, including gutters, garage doors and shelving. These additional offerings allow homebuilders to consolidate their subcontractors, simplifying their operations. We believe CEO Jeff Edwards, whose family owns 16% of the stock, is building a terrific company that thrives by offering great value to homebuilder customers and by using scale benefits of procurement to reward shareholders. US home starts are low right now, and IBP trades for about 17x earnings, a modest multiple of mildly depressed earnings. Market cap: $5.5 billion.”
8. KB Home (NYSE:KBH)
Number of Hedge Fund Holders: 26
KB Home (NYSE:KBH) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 3, Oppenheimer began coverage of the company’s stock with a “Perform” rating and no price target. The firm likes KB Home (NYSE:KBH)’s land strategy and believes that its build-to-order model possesses advantages over the long term. However, as per the analyst, the company’s market footprint and new approach about price over incentives are disadvantages in the current market. In Q2 2025, the company’s revenues came in at $1.53 billion as compared to $1.71 billion, while the average selling price rose marginally to $488,700.
In the current environment and considering KB Home (NYSE:KBH)’s robust existing land pipeline, it is scaling back the land acquisition and development investments, while increasing the share repurchases. In Q2 2025, KB Home (NYSE:KBH) repurchased $200 million of its outstanding common stock at an average price of ~$54 per share.
KB Home (NYSE:KBH) operates as a homebuilding company.
7. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 28
Sun Communities, Inc. (NYSE:SUI) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 4, Morgan Stanley analyst Adam Kramer lifted the price target on the company’s stock to $139 from $135, while keeping an “Equal Weight” rating, as reported by The Fly. As per the analyst, it was a mixed Q2 2025 earnings season for manufactured housing REITs. The analyst tweaked estimates and adjusted targets following the conversations with each company as well as private operator checks. Sun Communities, Inc. (NYSE:SUI) believes that Q2 2025 was one of the important quarters as it completed the sale of Safe Harbor Marinas and repositioned the company as a pure-play owner and operator of manufactured housing and RV communities with a healthy balance sheet.
The initial closing of the Safe Harbor Sale resulted in ~$5.25 billion of pre-tax cash proceeds, net of transaction costs, with a book gain on sale of $1.4 billion. Sun Communities, Inc. (NYSE:SUI) started its plan to deploy net cash proceeds from the Safe Harbor Sale towards a combination of debt reduction, shareholder distributions, share repurchases, and reinvestment in Sun Communities, Inc. (NYSE:SUI)’s core portfolio.
6. UDR, Inc. (NYSE:UDR)
Number of Hedge Fund Holders: 30
UDR, Inc. (NYSE:UDR) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 3, BMO Capital reduced the price target on the company’s stock to $44 from $45, while keeping an “Outperform” rating, as reported by The Fly. As per the analyst, UDR, Inc. (NYSE:UDR)’s asking rents had the best sequential trends in August, despite the overall deceleration in the market rents. As per the company, a resilient employment market, continued growth in personal income, favorable relative affordability for apartments as well as the operating competitive advantages resulted in the healthy results for H1 2025 that surpassed expectations.
In Q2 2025, UDR, Inc. (NYSE:UDR)’s total revenue rose $10.1 million YoY, or 2.4%, to $425.4 million. This rise was backed mainly by growth in revenue from same-store communities and completed developments, partially mitigated by the declines in revenue from property dispositions. With same-store occupancy remaining close to 97%, UDR, Inc. (NYSE:UDR) operates from a position of strength to maximize revenue and NOI.
5. Invitation Homes Inc. (NYSE:INVH)
Number of Hedge Fund Holders: 35
Invitation Homes Inc. (NYSE:INVH) is one of the Best Housing Stocks to Buy According to Hedge Funds. On August 28, Scotiabank reduced the price target on the company’s stock to $36 from $38, while keeping a “Sector Perform” rating, as reported by The Fly. The firm has been updating its price targets on stocks in the broader US Real Estate & REITs sector under its coverage after the Q2 2025 results. Elsewhere, Invitation Homes Inc. (NYSE:INVH)’s Q2 2025 performance demonstrates the continued strength and resilience of its platform.
The company continued to benefit from healthy resident demand, higher renewal rates, and disciplined cost control. Collectively, these reinforce its long-term growth strategy. On a YoY basis, Invitation Homes Inc. (NYSE:INVH)’s total revenues rose 4.3% to $681 million, property operating and maintenance costs increased 4.3% to $244 million, and net income available to common stockholders went up by 92.7% to $141 million.
Furthermore, Invitation Homes Inc. (NYSE:INVH) stated that acquisitions for Q2 2025 totaled 1,040 homes for ~$350 million via the various acquisition channels. Dispositions for Q2 2025 consisted of 295 wholly-owned homes for gross proceeds of ~$111 million and 63 homes for gross proceeds of ~$30 million in its joint ventures.
4. Equity Residential (NYSE:EQR)
Number of Hedge Fund Holders: 38
Equity Residential (NYSE:EQR) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 2, the company gave an update on certain same-store operating trends in its business. Its same-store revenue growth is on track within its guidance range. It is finishing its primary leasing season with high physical occupancy and robust retention. Equity Residential (NYSE:EQR) expects to produce same-store revenue growth of 2.6% – 3.2% and physical occupancy of 96.4% for FY 2025. Additionally, it has reaffirmed its Q3 2025 blended rate growth guidance of 2.2% – 2.8%.
Elsewhere, Equity Residential (NYSE:EQR)’s Q2 2025 revenue growth was helped by the continued strong operating fundamentals throughout most of its markets. For Q2 2025 versus Q2 2024, its same store revenues rose 2.7%, same store expenses increased 3.7% and same store Net Operating Income (NOI) went up by 2.3%. During Q2 2025, it acquired a portfolio of 8 properties, consisting of 2,064 apartment units, located in suburban Atlanta for an aggregate purchase price of ~$533.8 million.
Baron Funds, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
“Equity Residential (NYSE:EQR) is one of the largest U.S. apartment REITs with 80,000 high-quality apartment units concentrated in coastal markets with strong barriers to entry, compelling resident income/demographics, and high-cost home ownership. The company maintains a strong and liquid balance sheet.
It is valued at a 6.1% implied capitalization rate representing a discount to private market transactions in the high 4% to 5% capitalization range. At its public market implied valuation of only $410,000 per apartment, the shares are valued at an approximate 20% discount to private market values and a much larger discount to replacement cost.”
3. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 40
AvalonBay Communities, Inc. (NYSE:AVB) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 11, Truist upgraded the company’s stock to “Buy” from “Hold” with a price objective of $218, down from the prior target of $224, as reported by The Fly. As per the firm’s analyst, the shares are undervalued, as they are currently trading at a historically low funds from operations multiple. Furthermore, the analyst believes that AvalonBay Communities, Inc. (NYSE:AVB) will see healthy earnings growth with little new supply in its markets that can help in mitigating potentially soft national job growth.
Regarding the development activity, during the three and six months ended June 30, 2025, AvalonBay Communities, Inc. (NYSE: AVB) completed the development of Avalon Princeton on Harrison, located in Princeton, NJ. Avalon Princeton on Harrison has 200 apartment homes and was constructed for a total capital cost of $79,000,000. During the 3 months ended June 30, 2025, AvalonBay Communities, Inc. (NYSE:AVB) sold Avalon Wesmont Station I & II, 2 wholly-owned communities with 406 apartment homes as well as 18,000 square feet of commercial space, located in Wood-Ridge, NJ. The communities were sold for $161,500,000, leading to a gain in accordance with GAAP of $99,636,000 and economic gain of $71,648,000.
2. PulteGroup, Inc. (NYSE:PHM)
Number of Hedge Fund Holders: 42
PulteGroup, Inc. (NYSE:PHM) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 2, Wells Fargo lifted the price target on the company’s stock to $150 from $135, while keeping an “Overweight” rating, as reported by The Fly. Notably, the firm adjusted price targets in the homebuilding group, highlighting that the investors have been pricing in some forward optimism on interest rates while generalists are doing more work on the group. The firm increased valuations throughout the board after the recent re-rating of the stocks.
PulteGroup, Inc. (NYSE:PHM) delivered healthy financial results in Q2 2025, with its disciplined business practices enabling it to navigate the current highly competitive homebuilding environment. PulteGroup, Inc. (NYSE:PHM) achieved Q2 2025 earnings of $3.03 per share, as it closed 7,639 homes while driving strong gross and operating margins of 27.0% and 17.9%, respectively. At quarter’s end, its backlog stood at 10,779 homes with a value of $6.8 billion.
PulteGroup, Inc. (NYSE:PHM) is engaged in the homebuilding business.
1. Toll Brothers, Inc. (NYSE:TOL)
Number of Hedge Fund Holders: 54
Toll Brothers, Inc. (NYSE:TOL) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 11, the company announced that its newest community, Coldwater Ridge of Northville, is now open in Northville, Michigan. It features luxury condos possessing modern home designs providing first- and second-floor primary bedrooms. Toll Brothers, Inc. (NYSE:TOL) stated that homes are being priced from the low $500,000s.
In Q3 2025, Toll Brothers, Inc. (NYSE:TOL)’s home sales revenues came in at $2.88 billion, reflecting a rise of 6% YoY. It delivered 2,959 homes at an average price of $974,000. Toll Brothers, Inc. (NYSE:TOL) signed 2,388 net contracts for the consideration of $2.4 billion in Q3 2025. The average sales price of new contracts amounted to $1.0 million, reflecting a 4.5% YoY increase. Toll Brothers, Inc. (NYSE:TOL) remains focused on strategically balancing price and pace to maximize profitability and returns. The company controls sufficient land to support continued community count growth over the upcoming several years, enabling it to be highly selective and disciplined in its land acquisition.
Toll Brothers, Inc. (NYSE:TOL) is the nation’s leading builder of luxury homes.
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