Homebuilding boom shows no sign of slowing for D.R. Horton

Investors who think D.R. Horton’s good fortunes can’t continue might need to stop worrying and learn to love the boom.

As the nation’s largest homebuilder—with multiple projects underway in Baton Rouge—D.R. Horton has been well-placed to benefit from the wave of homebuying the pandemic set into motion, The Wall Street Journal reports.  Operating in 30 states, it is an active builder in many of the suburban communities that people have been flocking to. Moreover, nearly one-third of the houses it builds come from its Express Homes division, which is aimed at first-time homebuyers such as millennials making the plunge.

This has been good for shares of D.R. Horton, which, though below the record they hit this spring, are about 50% above where they were before COVID-19 concerns hit the stock market in February 2020. 

The high levels of demand might persist for some time. Before the COVID-19 crisis, the big question in the housing market was when more members of the millennial generation might finally begin buying homes of their own. But in the wake of the crisis, suburban living—and the space it allows—took on an allure it didn’t have before, while the likelihood that the ability for many people to work remotely at least part of the time increases the appeal.

Bill Smead, chief investment officer of Smead Capital Management, which owns shares of D.R. Horton, says the pandemic has been a watershed moment: “The largest adult group went from no interest at all to all the interest in the world.” Read the full story.