Economists anticipate low mortgage rates, stronger job growth, and lower gas prices to foster new-home sales growth of 5% to 7% in the next year versus the roughly 5% decline in new homes sales in 2014, said Lawrence Yun, chief economist with the National Association of Realtors.
"There is a significant need for greater activity in the next year in the housing sector and it's positioned well for growth," Yun said. Home sales fell to a seasonally adjusted rate of 4.93 million in November from 5.25 million in October, but up 2.1% from November 2013 sales, according to a National Association of Realtors report released today.
Homebuilders such as Lennar (LEN) , with strong positions in job-growth states such as California, Arizona, Nevada, Texas and Florida, are best positioned to benefit from a housing market rebound, says Robert Wetenhall Jr., managing director for equity research at RBC Capital Markets.
"The multifamily construction business, mortgage finance and private equity funds represent a source of hidden value that aren't full priced into the stock," Wetenhall told TheStreet. He said those factors combined should generate "visible earnings" for Lennar in the second half of 2015.
Lennar, which provides refinancing and mortgage services, plans to invest $375 million in the next four years into geographically diverse, multifamily properties with an estimated value of $5 billion. Shares are trading toward the top of a 52-week range of $16.56 to $22.03.