According to a recent story by NBC News, home sales are off to a ‘sluggish’ start this year, and predicted to be even slower with the months to come. One of the reasons for this are young people–recent college grads and other 20-somethings–tend to be living in their parents’ homes. The National Association of Realtors says the percentage of young people living at home is at its highest in years. Even when millennials get their own places, they usually will just rent, not buy, according to the report.
However, NBC News does mention that the projected numbers show that young people are beginning to find more work now, and therefore are hopefully becoming more likely to live on their own in the coming years.
We’ve been following this short list of small cap housing stocks to see how this trend is reflected in their prices. Here’s how they’ve been doing lately.
Red Bank, NJ-based Hovnanian Enterprises (NYSE: HOV) is a homebuilder company that for 60 years has been operating to provide houses such as single-family detached homes, condominiums and townhouses. Their main two areas of operation are homebuilding and financial services. According to their quarterly fiscal results for the period ending January 31st, HOV’s total revenues had increased by 1.6% compared to last year, and CEO Ara K. Hovnanian reported:
“We are encouraged by the fact that we have a higher contract backlog, gross margin and community count than we did at the same point in time last year. Furthermore, we have taken steps to spur additional sales in the spring selling season, including the launch of Big Deal Days, a national sales campaign during the month of March.”
Hovnanian also mentioned that the first quarter has always been the slowest seasonal period for them. When we last checked on July 30th of 2013, HOV closed at $5.21. HOV closed May 19 at $4.43, down $0.11, with a market cap of $642.93 million. Its 52-week trading range is $4.36 – $6.80.
KB Home (NYSE: KBH), is a homebuilding and financial services company based in Los Angeles and geared primarily to providing service to first-time home buyers. This April, KBH was given five different awards at the 2014 Las Vegas “Silver Nugget Awards”, which honor excellence and achievements in Nevada’s homebuilding industry. Last July, KBH closed at $16.92. On May 19th, KBH closed at $15.87, up $0.06, with a market cap of $1.33 billion. Its 52-week trading range is now $15.40 – $24.55
Columbus, OH-based M/I Homes Inc. (NYSE: MHO) operates in the Midwest, Mid-Atlantic and southern parts of the U.S, building small homes, offering financial homebuilding services. In 2013, the company increased new contracts by 25%, while increasing homes delivered by 26%. On July 30 of last year, MHO closed at $20.92. On May 12th, MHO closed at $22.17, up $0.07, with a market cap of $537.78 million. Its 52-week trading range is now $17.82 – $27.88.
Atlanta-based Beazer Homes USA (NYSE: BZH) specializes in single-family and multiple-family homes, operating in 16 states in the U.S., as well as acquiring, renovating and renting already-existing properties. In early April, the EPA named Beazer Homes the 2014 ENERGY STAR partner of the year through its “outstanding contribution to reducing greenhouse gas emissions through building ENERGY STAR homes.” On July 30, 2013, BZH closed at $16.93. On May 19th, BZH closed at $18.82, up $0.29, with a market cap of $493.29 billion. Its 52-week trading range is $15.54 – $25.34.
Standard Pacific Corp. (NYSE: SPF) is an Irvine, CA-based company building single family and detached homes targeting a diverse range of homebuyers and providing mortgage financing services through its subsidiary, Standard Pacific Mortgage. On July 30th, 2013, it closed at $7.93. On May 19th, SPF closed at $7.75, down $0.06, with a market cap of $2.15billion. Its 52-week trading range is now $7.03 – $9.85.
Westlake Village, CA-based The Ryland Group (NYSE: RYL) is a homebuilder and mortgage finance company, and also operates in the sector of design, construction, title insurance and escrow. Like Beazer Homes, RYL was also recognized by the EPA’s ENERGY STAR program, as a 2014 ENERGY STAR® Certified Homes Market Leader due to RYL’s energy-saving initiative, HouseWorks®, which ensures that every new home is built according to the leading industry standards in energy efficiency. On July 30 RYL closed at $38.39. On May 19th, RYL closed at $37.23, up $0.05, with a market cap of $1.73 billion. Its 52-week trading range is now $33.04 – $50.42.
While these small cap stocks have seen a slow start this quarter, this is usually expected seasonally in the homebuilding market. This sector could continue to see some interesting changes, especially depending on whether or not millennials start buying homes if the job market improves their financial stability.