13 Best Housing Stocks To Buy Now

Published October 27, 2022 at 11:32 am EDT Updated August 31, 2026 at 8:39 pm EDT

In this article, we will discuss the 13 Best Housing Stocks To Buy Now.

The U.S housing market has been dynamic in 2022. The talk of a correction in the housing market has meant that investors have started to move away from housing stocks. However, many solid real estate stocks are now available at an attractive valuation after a strong correction.

Real Estate always makes for a reliable and resilient investment outlet owing to several factors. Real estate stocks often provide solid dividend income. The fundamental demand and supply dynamics surrounding the housing market are favorable for long-term investment. As per CBS News, the U.S currently has a housing shortage of 3.8 million units, double the amount from 2021.

Our Methodology

We have hand-picked the 13 best housing stocks based on a number of factors, including their valuation metrics, analyst ratings, and dividend yield. We have then ranked the stocks from 13 to 1 based on the number of hedge funds in our database that had stakes in them as of the end of the June quarter.

13. Kimco Realty Corporation (NYSE:KIM)

Number of Hedge Fund Holders: 19

Headquartered in Jericho, N.Y., Kimco Realty Corporation (NYSE:KIM) is a real estate investment trust (REIT) that owns & runs a portfolio of over 400 shopping complexes and mixed-use assets across prime locations in the U.S. Its asset base consists mainly of inner suburban properties in key metropolitan areas. The company is also recognized as an industry leader in environmental, social, and governance (ESG) compliance.

On October 14, 2022, Kimco Realty Corporation announced that it sold its partial stake in the supermarket chain, Albertsons. The company will get $300 million from the proceeds of the sale. It is expected that the company will pay a special dividend to shareholders from the proceeds. Kimco Realty Corporation valuation metrics reflect that the company may be undervalued and not incorporating the growth prospects of the company. Kimco Realty Corporation is also offering an attractive dividend yield of 4.47% to its investors.

On October 7, 2022, Derek Johnston, an analyst at Deutsche Bank, reduced his price target on Kimco Realty Corporation to $21. The analyst currently has a Hold rating on the company, and in a research note, he stated that the retail leasing demand has slowed down in Q3 as mortgage costs continue to increase after recent hikes in interest rates.

Millennium Management held the highest stake in Kimco Realty Corporation at the end of the June quarter, with an investment value of approximately $25 million in the company. 19 hedge funds are currently bullish on Kimco Realty Corporation as per Insider Monkey database.

12. Tri Pointe Homes, Inc. (NYSE:TPH)

Number of Hedge Fund Holders: 20

Tri Pointe Homes, Inc. (NYSE:TPH)’s key operations include homebuilding and financial services. The company, with headquarters in California, has an operational base comprising of 41,675 controlled or owned lots as well as 112 selling communities. It is involved in the business of designing, constructing, and selling attached and detached single-family units in the U.S. Its property portfolio consists of six brands.

The company’s stock has lost a significant amount of value in 2022, with shares down 43.26% YTD as of October 24, 2022. Tri Pointe Homes, Inc. is currently trading at a relatively cheap valuation of 5.70x forward P/E, which is significantly lower than the sector median of 12.8x forward P/E. The company’s low valuation and robust financial position make the company a good buy right now for exposure in housing.

Earlier this year, investment management firm Third Avenue Management discussed the growth potential of Tri Pointe Homes, Inc. in its fourth-quarter 2021 investor letter. The fund stated:

Single-Family (4.0% of assets): Tri-Pointe Holdings own highly attractive land assets in supply constrained geographies. The company have taken advantage of the single-family housing boom by monetizing assets at attractive prices despite a challenged cost environment. Tri-Pointe’s exceptional asset quality coupled with insatiable demand for residential housing should allow them to grow intrinsic value despite higher costs and supply chain delays industrywide.

As per Insider Monkey database, 20 hedge funds had stakes in Tri Pointe Homes, Inc. at the end of the June quarter. AQR Capital Management was the most bullish fund on the company’s stock, with a total holding of 2,536,331 company stocks at the end of Q2 2022.

11. Cavco Industries, Inc. (NASDAQ:CVCO)

Number of Hedge Fund Holders: 21

Cavco Industries, Inc. (NASDAQ:CVCO) is committed to home building and provision of home service. Their factory-built housing segment includes manufactured homes, modular homes, park model, and cabin R.V.s, whereas their financial service segment offers mortgage lending and insurance. The company employs over 6,300 individuals and has 48 distribution points across U.S and Canada. Some of the key brands of Cavco include Cavco Homes, Palm Harbor Homes, Fairmont Homes, Destiny Homes, Fleetwood homes, and Chariot Eagle.

Cavco Industries, Inc. recently established a new 184,000-square-foot manufacturing facility in North Carolina. The facility will ensure the building of high-quality homes to meet the demand for new homes.

As of August 08, 2022, Greg Palm, an analyst at Craig-Hallum, has a Buy rating on Cavco Industries, Inc. stock with a price target of $335. The company is currently trading at a valuation of EV/EBITDA (FWD) of 5.49x as of October 24, 2022, considerably lower than the sector median of 8.31x. Given the company’s strong history of operational excellence, the company is a good buy at this price level for investors with a long holding period.

At the end of Q2 2022, 21 hedge funds in Insider Monkey database were bullish on the company. Broad Bay Capital remained the fund with the biggest holding at the end of the quarter, amounting to a value of over $52 million.

10. Eagle Materials Inc. (NYSE:EXP)

Number of Hedge Fund Holders: 22

Eagle Materials Inc. (NYSE:EXP) is a key U.S producer and supplier of light building materials and heavy construction materials. It is involved in the manufacturing and distribution of Portland cement, concrete, gypsum wallboard, recycled paperboard, and oil & gas proppants.

Eagle Materials Inc. has demonstrated an economic moat with its long history of profitability and operational effectiveness as compared with its peers. On September 22, Adrian Huerta, an analyst at JPMorgan, increased his price target on Eagle Materials Inc. shares to $140. The analyst raised his 2023 EBITDA estimate for the company by 3% to reflect an increase in pricing. The company is currently trading at a forward P/E of 9.62x as compared to the sector median of 11.30x as of October 24, 2022. Moreover, Eagle Materials Inc. currently offers a dividend yield of 0.88%.

Here is what L1 Capital International Fund had to say about Eagle Materials Inc. in its Q4 2021 investor letter:

Adjustments to the portfolio were relatively modest and centered on some of the smaller positions. Within the Top 10 holdings, there were two additions and two exits, although both companies that exited the Top 10 remain meaningful positions. Eagle Materials returned to the Top 10 due to relative outperformance, with the share price increasing 27% (in USD). Eagle Materials is one of the portfolio’s businesses exposed to the U.S. new residential, repair and renovation and infrastructure sectors, all of which have a robust outlook.

At the end of the quarter ending June 2022, Citadel Investment Group was the leading holder of the company’s stock, with an investment value of approximately $20 million in the company’s shares. As per Insider Monkey database, 22 hedge funds owned stakes in Eagle Materials Inc. at the end of Q2 2022.

9. Federal Realty Investment Trust (NYSE:FRT)

Number of Hedge Fund Holders: 24

In business since 1962, Federal Realty Investment Trust (NYSE:FRT) is engaged in the business of dealing in premium retail properties mainly located in the key coastal regions across the U.S. They hold expertise in developing urban, mixed-use localities. The company owns around 106 properties which comprise of approximately 3,200 residential units and house approximately 3,100 tenants.

Federal Realty Investment Trust has been working on enhancing its ESG compliance and, on 13 October 2022, announced to reduce its greenhouse gas emissions by 46% by the end of 2030. The company currently has a solar plant with a capacity of 14 M.W., which it plans to increase in the future.

Federal Realty Investment Trust is considered a dividend aristocrat by investors as it has paid an increasing dividend to investors for the last 55 years. The current dividend payment of the company is $4.32 for the year. The company’s stock price is down 32.5% YTD as of October 24, 2022. Federal Realty Investment Trust offers an attractive dividend yield of 4.68% at the current price level.

8. Meritage Homes Corporation (NYSE:MTH)

Number of Hedge Fund Holders: 25

Meritage Homes Corporation, based in Arizona, is in the business of homebuilding and financial services. The homebuilding business unit engages in land acquisition, land development, home construction, marketing new and old homes, and more. The financial services unit offers mortgage services.

On October 10, 2022, Jay McCanless, an analyst at Wedbush, reduced his price target on Meritage Homes Corporation to $102. The analyst has an Outperform rating on the stock and believes that the current downturn in the housing market is temporary and the market is going to change directions during the first half of next year.

Meritage Homes Corporation appears undervalued at every valuation metric and is currently trading at a forward P/E of 3.62x as of October 24, 2022. The company is fundamentally strong, and although a high-interest rate environment has caused a slowdown in housing demand, the long-term demand outlook is still strong due to a supply shortage which will spur housing demand.

Here is what Sterling Partners Equity Advisors has to say about Meritage Homes Corporation in its Q4 2021 investor letter:

Meritage Homes is a large public homebuilder in the United States focused on the entry-level and first move-up buyers in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee.

Meritage had their highest gross margin, 29.7%, and EPS, $5.25, during the third quarter of 2021. Management believes the housing market remains solid from continued demand with historically low interest rates and limited housing supply.

We own the stock on the simple thesis that our modern society creates a stable demand for new homes as people need shelter and want modern designs.

7. Toll Brothers, Inc. (NYSE:TOL)

Number of Hedge Fund Holders: 29

Toll Brothers, Inc. (NYSE:TOL) was founded by Robert Toll and Bruce Toll in 1967. It is the leading constructer of luxury housing and is currently providing services across 24 states in the U.S. The company serves a wide range of customer bases, including but not limited to first-time movers, empty-nesters, second-home buyers, active adults, and more.

As per its fiscal year Q3 results, the company’s backlog amounts to $11.2 billion, which will be sufficient for the company to keep generating strong cash-flow due to the headwinds present in the housing market. Toll Brothers, Inc. is trading at a forward P/E of 4.49x as of October 24, 2022, which presents a bargain price for investors. Toll Brothers, Inc. also offers a dividend yield of 1.92% at the current price level.

Here is what Baron Real Estate Fund has to say about Toll Brothers, Inc. in its Q2 2022 investor letter:

Toll Brothers, Inc. is the leading luxury homebuilder in the U.S. Toll Brothers’ shares corrected more than 41% in the first six months of 2022. Its valuation is only 0.9 times tangible book value versus a long-term average of approximately 1.4 times book value and a peak multiple of approximately 2.0 times book value.

Greenhaven Associates held the highest stake in the company at the end of Q2 2022, with a total holding of 5,357,903 shares in the company. According to Insider Monkey database, 29 hedge funds owned stakes in Toll Brothers, Inc. at the end quarter ending June 2022.

6. NVR, Inc. (NYSE:NVR)

Number of Hedge Fund Holders: 32

Headquartered in Reston, Virginia, NVR, Inc. (NYSE:NVR) is another player in the residential construction industry. Employing about 6,600 individuals, the company conducts its operation within two units, homebuilding and mortgage banking. The company’s construction segment operates in 15 states across the country, covering 35 urban areas.

Earlier in August, NVR, Inc. announced a share buyback program in which the company intends to purchase its outstanding common stock of $500 million. The company has been continuously doing share repurchases since 1994 as it is a tool through which the company provides value to its shareholders. Since its IPO, the company has decreased its share count by 75% while raising EPS by four times in addition to the organic profits’ growth.

NVR’s business fundamentals remain sound, and the company has a strong balance sheet. The company has $1.4 billion in cash available on its balance sheet, which positions the company to survive a downturn in the market, unlike many of its homebuilding peers.

Here is what Diamond Hill Large Cap Fund has to say about NVR, Inc. in its Q1 2022 investor letter:

Homebuilder NVR, along with other housing companies, was pressured in Q1 primarily on concerns that rising mortgage rates will dampen new home demand. We recognize the challenges presented by a rising interest rate environment in the near term. Longer term, the secular outlook on housing construction is positive, as there remains a material shortage of housing stock in the U.S. We also like NVR’s approach in which it has an option on land rather than owning it outright, which exposes the company to less risk from falling land prices.

5. D.R. Horton, Inc. (NYSE:DHI)

Number of Hedge Fund Holders: 44

Headquartered in Arlington, Texas, D.R. Horton, Inc. (NYSE:DHI) is a homebuilder involved in land acquisition and development and construction and sale of residential properties. The firm’s operation footprint extends over 102 markets in 32 states in the U.S. The company’s business segments include homebuilding and financial services.

D.R. Horton, Inc. is the biggest homebuilder in the United States, with a $24.2 billion market cap and $27.7 billion in revenue (Fiscal Year 21). The company is currently trading at an attractive valuation of 5.41x forward P/E as compared to the sector median of 12.01x as of October 24, 2022. This presents a good opportunity for investors to get in at a solid company with a strong history of performance at low price levels. Additionally, the company is also currently offering a dividend yield of 1.29% to investors.

On October 10, 2022, Jay McCanless, an analyst at Wedbush, reduced his price target on D.R. Horton, Inc. to $83. The analyst has an Outperform rating on the shares. The analyst believes that the company will report lower earnings over the coming few quarters as mortgage demand slows down.

Here is what Third Avenue Management specifically said about D.R. Horton, Inc. in its Q2 2022 investor letter:

D.R. Horton, Inc. is the largest homebuilder in the U.S. by volume (the company sold more than 90k homes in the past year) with a well-recognized focus on delivering quality product at the entry-level price point (its average selling price is less than $400k) and market-leading positions in key Sunbelt markets.

While the near-term outlook for DR Horton remains uncertain given the adjustments occurring in the U.S. residential markets, the medium-to-long-term prospects for volume-based homebuilders with super-strong balance sheets and scale advantages continue to be promising in Fund Management’s view. More specifically, (i) residential inventories remain around record-low levels in most major markets when gauged by aggregate units available (see chart below), (ii) demand for single-family residences seem to have multiple secular drivers as the largest generation in U.S. history (the “millennial cohort”) enters its prime home buying years and desires more space not only due to “life events” but also “remote” and “hybrid” working arrangements, and (iii) significant inflation in rental rates for multi-family units in urban areas has left the rent-toown proposition for single-family homes in suburban areas in a compelling range (particularly in the Sunbelt region which is experiencing outsized job growth and wage growth relative to broader national figures).

In Fund Management’s view, the two industry participants that seem most likely to take part in this shift include DR Horton and Lennar Corp. (a long-held position in the Fund). In conjunction, these two “blue-chip builders” now account for approximately 10% of the Fund’s capital, as well as roughly one out of every five new homes built in the Sunbelt. They would also qualify under Third Avenue Founder Marty Whitman’s “Safe and Cheap” maxim as both companies are nearly “net-cash” (i.e., more cash than debt) with common stocks trading at less than five times trailing earnings, on average.

4. Simon Property Group, Inc. (NYSE:SPG)

Number of Hedge Fund Holders: 45

Simon Property Group, Inc. (NYSE:SPG) is engaged in the business of retail real estate and is the largest mall operator globally. With headquarters in Indianapolis, the company has a stake in 232 properties across the globe and employs 5500 people in the U.S. The company has several acquisitions and expansion plans in the pipeline and acquired many new malls in its latest aggressive expansion strategy.

On October 11, 2022, Simon Property Group, Inc. announced a strategic partnership with Jamestown, which will close after regulatory approvals at the end of 2022. After the commencement of the partnership, Simon Property Group, Inc. will acquire a 50% stake in Jamestown. The company’s stock is down 36.9% as of October 24, 2022, and currently is offering an excellent dividend yield of 6.93%.

Here’s what Baron Funds said about Simon Property Group, Inc. in its Q1 2022 investor letter:

Following a share price gain of more than 97% in 2021, we recently trimmed the Fund’s holdings in Simon Property Group, Inc., the largest and premier mall operator in the U.S. Though we are also tempered by the expectation for modest earnings growth in 2022, we remain optimistic about the company’s long-term prospects. Simon owns A-quality malls in A-quality geographic locations. We expect Simon to benefit from the ongoing economic recovery and believe management is well positioned to acquire real estate assets given its strong balance sheet and low cost of capital.

3. Lennar Corporation (NYSE:LEN)

Number of Hedge Fund Holders: 47

Lennar Corporation (NYSE:LEN) is a homebuilding firm that runs multiple segments under its brand, including Homebuilding Central, Homebuilding East, Homebuilding Texas, Multifamily, financial services, and Lennar Other. The homebuilding business caters to single-family houses, residential land, and multifamily rental properties. The financial segment handles mortgage financing, closing services for clients, and title insurance.

Lennar Corporation is trading at an attractive forward P/E of 5.69x as of October 24, 2022, in comparison to the sector median of 12.82x. Despite the slowdown in the housing market, the company continues to deliver strong margins due to its dynamic pricing model and is relatively better placed than other housing stocks to pull through the correction in the housing market. Moreover, Lennar Corporation offers a dividend yield of 2.04% at the current price level.

On October 4, 2022, Aaron Hecht, an analyst at JMP Securities, reduced his price target on Lennar Corporation to $115. The analyst currently has an Outperform rating on the stock. The analyst stated that the company performed well in Q3 as the homebuilding segment continued to post good results, but there will be some pressure on the business as housing affordability deteriorates in the future.

At the end of Q2 2022, Greenhaven Associates held the highest stake in Lennar Corporation, with a holding of 9,320,767 shares of the company, constituting 14.19% of the fund’s portfolio. According to Insider Monkey database, 47 hedge funds owned stakes in the company at the end of the June quarter.

2. Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Holders: 53

Lowe’s Companies, Inc. is a specialty retailer offering a wide range of home makeover products. Its product line entails construction materials, decorative and remodeling products along with home improvement items such as carpets, lawn and gardening, electrical, plumbing, tools, kitchen, and other home furnishings. The company operates a retail network comprising of approximately 1,971 outlets countrywide. Lowe’s Companies Inc. has headquarters in Mooresville, North Carolina.

On October 3, 2022, Jonathan Matuszewski, an analyst at Jefferies, increased his price target on Lowe’s Companies, Inc. to $259. The analyst has a Buy rating on the company and believes that the company’s home maintenance and emergency repair services provide protection against downside risk, which is not currently appreciated by the market.

Lowe’s has a demonstrated record of solid operational performance in the past. The company has generated $3.23 in value for every dollar retained by the company from 2015 to 2019. Lowe’s Companies, Inc. is also offering a dividend yield of 2.30% to investors. The company is currently available at a discount to its intrinsic value, which makes it a good buy at the moment.

Here is what Pershing Square Holdings specifically said about Lowe’s Companies, Inc. in its Q2 2022 investor letter:

Lowe’s Companies, Inc. ‘s is a high-quality business with significant long-term earnings growth potential underpinned by a superb management team that is successfully executing a multi-faceted business transformation.

COVID-19 was a transformational event for the U.S. housing market, causing homeowners to invest significantly in their homes as they shifted nearly all their daily activities to the home environment, including work, school, and leisure. The increased use of the home during COVID, in turn, increased the need for repair, maintenance and remodel activity, which significantly benefited Lowe’s same-store sales. As consumers return to spending more time and money on out-of-the home activities the near-term demand for certain Do-It-Yourself (“DIY”) categories has decreased. Moderation in DIY demand combined with increased mortgage rates and decreased housing affordability has caused many market participants to become concerned that the home improvement industry may give up a significant part of their COVID pandemic sales gains.

While we expect that there will be some near-term volatility and continued moderation of DIY demand, growth remains strong for projects requiring professional installation (the “Pro” business) due to a substantial backlog of projects undertaken during COVID, which should support industry growth in the near-term. In addition, we believe the medium[1]term growth outlook for the home improvement industry remains strong as demand is likely to normalize at a materially higher level as compared to the pre-COVID era. For the decade prior to COVID, home improvement industry sales were notably depressed relative to their long-term averages as a percentage of overall consumer spend and GDP and have only now returned to their longer-term historical levels. Moreover, we believe COVID has permanently renewed consumers’ focus, appreciation, and utilization of their homes, which combined with higher home equity values, strong consumer balance sheets, low levels of home inventory for sale and an aging housing stock that requires an increasing level of maintenance, will likely result in a structurally higher level of ongoing home industry spending in the future. In the most recent quarter demand strengthened throughout the quarter as DIY consumers returned from summer vacations and focused on less seasonal home improvement projects… (Click here to read the full text)

1. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 80

Headquartered in Atlanta, Georgia, The Home Depot, Inc. (NYSE:HD) is the world’s most prominent home renovation retailer, operating 2300 retail outlets across the U.S, Canada, and Mexico. Its offerings include an array of building materials, hardware supplies, electrical products, various interior and exterior decoration products, indoor and outdoor gardening items alongside supplementary services such as installation services and home delivery.

The Home Depot, Inc. stock is down 32.5% YTD as of October 24, 2022, amidst a broader market sell-off. However, the company’s financial results have been resilient despite the deteriorating housing affordability, and recently the management of the company reaffirmed its full-year revenue guidance. The company is currently trading at 16.29x as of October 24, 2022, which is well below its historical average, and presents a good buying opportunity for long-term investors. Moreover, The Home Depot, Inc. offers a dividend yield of 2.76% at the current price level.

Jonathan Matuszewski, an analyst at Jefferies, currently has a Buy rating on The Home Depot, Inc.. On October 3, 2022, the analyst increased his price target on the company to $394.

Here is what Diamond Hill Capital specifically said about The Home Depot, Inc. in its Q2 2022 investor letter:

The Home Depot, Inc. (NYSE:HD) is a high-quality operator in the home improvement industry. Macroeconomic concerns, particularly the rise in mortgage rates, caused the share price to pull back and trade at a greater discount to our estimate of intrinsic value. We believe Home Depot is well positioned to continue gaining share due to its premium real estate locations, strong operations and recent investments in its supply chain. We like Home Depot’s exposure to the professional customer and believe in its ability to take market share in this segment as we believe home improvement spending has the potential to remain resilient in upcoming years.

According to Insider Monkey database, 80 hedge funds held a stake in The Home Depot, Inc. at the end of the second quarter ending June 2022. Fisher Asset Management was the leading stakeholder of the company, with an investment value of over $2 billion in the company.

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