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A Look at the Boom in Home Builder Stocks During 2023

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A Look at the Boom in Home Builder Stocks During 2023

In 2023, stocks for the 10 biggest U.S. home builders outperformed the S&P 500. What does that say about the housing market?

January 8, 2024
New-home builder stocks riding high in 2023
Image: Nuthawut / stock.adobe.com

During 2023, new-home building had the edge over the existing-home market due to lack of available existing housing stock and a reluctance among many homeowners to sell due to persistently high mortgage rates. Those conditions gave new-home builders the upper hand—if they were willing to make their homes more affordable to buyers via price cuts or mortgage rate buydowns. 

And that sent the stocks of some publicly traded builders soaring, Fast Company reports. Among the 10 major U.S. home builder stocks tracked by ResiClub, a media and research company that reports on and analyzes regional housing markets, all 10 of those builders stocks outperformed the S&P 500 during 2023.

That includes PulteGroup (up 128.4% over the past 12 months), Toll Brothers (up 106.3%), and KB Home (up 98.6%). Those firms all posted stock gains between December 19, 2022, and December 19, 2023, that were far above the 24.8% gain posted by the S&P 500 Index during the same period.

During the pandemic housing boom—a period of seemingly unlimited housing demand—many single-family builders like PulteGroup achieved record profit margins as they jacked up their prices. Those elevated margins gave builders breathing room to reduce margins (i.e., cut prices or offer mortgage rate buydowns) in pursuit of “finding the market” once mortgage rates spiked in 2022.

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