Lennar Corporation (LEN): Comprehensive Proof That the Housing Recovery Is Real

On the other hand, the low supply in the housing market, thanks largely to the 20% to 25% of homeowners who are still underwater, would suggest that things should continue to improve irrespective of increasing interest rates. And on top of this, in a perverse way, the higher interest rates may even spur more homeowners to buy sooner rather than later. As a prospective homebuyer told CNBC’s Diana Olick recently, “I’m afraid we’re going to miss the boat.” If this is true, it could amount to a massive boost to mortgage lenders such as Wells Fargo & Co (NYSE:WFC), which underwrites an estimated one in three domestic mortgages, and homebuilders such as D.R. Horton, Inc. (NYSE:DHI), which builds more houses than any other company in America. Suffice it to say, it would also provide stimulus to more peripheral operators such as The Home Depot, Inc. (NYSE:HD), the nation’s largest home-improvement retailer. In its most recent earnings, in fact, the company increased its revenue and earnings projections going forward for this very reason.

The Foolish bottom line
In sum, virtually all of the data right now is pointing toward a robust recovery in the housing market. Whether it’s overheating or just starting to gain momentum remains to be seen. But either way, this is a critical area for investors to watch. As my colleague Morgan Housel has previously observed, “There hasn’t been a strong economy without a strong housing market in modern history.”

The article Comprehensive Proof That the Housing Recovery Is Real originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Home Depot and Wells Fargo and (NYSE:WFC) owns shares of Wells Fargo.

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