U.S. Housing Starts & Permits Surge in February: 5 Top Picks

Industry Overview - U.S. home construction experienced significant growth in February, rebounding from earlier weather-related setbacks, driven by favorable mortgage rates and a shortage of existing homes for sale [1][2] - Builders are adapting to higher mortgage rates by implementing price reductions and incentives, as well as adjusting home sizes to manage rising material costs [1][2] Key Statistics - Housing starts increased by 10.7% month-over-month to a seasonally adjusted annual rate of 1.521 million units in February, surpassing the consensus estimate of 1.453 million units by 4.7% [2] - Residential building permits rose by 1.9% month-over-month and 2.4% year-over-year to an annualized rate of 1.518 million units, exceeding analysts' predictions [2] - Single-family homebuilding starts surged by 11.6% from January and 35.2% year-over-year [3] Market Trends - Anticipated Federal Reserve rate cuts in late 2024 may stabilize mortgage rates, benefiting homebuilders [4] - The 30-year fixed mortgage rate decreased to 6.74% as of March 14, 2024, marking a decline from the previous week and the lowest level since early February [4] - Homebuilder sentiment increased to 51 in March, indicating positive trends in the housing market [5] Company Performance - Toll Brothers, Inc. (TOL) shares surged 108.5% over the past year, with EPS estimates for fiscal 2024 rising to $13.72 [7] - Century Communities, Inc. (CCS) shares increased by 48% over the past year, with EPS estimates for 2024 rising to $10.06 [8] - Armstrong World Industries, Inc. (AWI) shares rose 78.4% over the past year, with EPS estimates for 2024 increasing to $5.74 [9] - Summit Materials, Inc. (SUM) shares gained 53.6% over the past year, with EPS estimates for 2024 rising to $2.31 [9] - Masco Corporation (MAS) shares rallied 46.9% over the past year, with EPS estimates for 2024 increasing to $4.12 [9]