In a new report, JPMorgan analyst Michael Rehaut lists and answers the ten biggest questions about homebuilders in 2016. Here’s the full list:
1. Given the 20 percent pullback in the group since 12/1/15, has anything changed fundamentally?
Rehaut sees the homebuilder market as fundamentally “fairly stable” and sees the large pullback as a buying opportunity.
2. What can be learned from 2015’s varied performance across the group?
The market differentiated top names based on execution, liquidity, balance sheets and risk aversion.
3. What will housing starts and home prices do in 2016?
JPMorgan forecasts a 10 percent gain in single-family starts and new home sales and a 3-5 percent gain in home prices.
4. How will the Fed tightening program impact the stocks and the industry?
The housing market will likely not be meaningfully impacted by the Fed’s conservative tightening plans in 2016.
5. How bad will Houston get, and could it spread to Dallas?
Rehaut believes that Houston is in store for a rough selling year in 2016, but has yet to see evidence of weakness in the Dallas market.
6. How much longer will labor shortages continue to impact the builders?
JPMorgan predicts that labor shortages will continue to impact builder results for the next two quarters, but the impact should diminish in the second half of the year.
7. What is the likelihood of more public-to-public M&A occurring in 2016?
Rehaut believes…
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