Citi Sees Homebuilder Stocks Winning as Housing Inventory Stays Tight
- A gauge of homebuilders outperformed the S&P 500 last week
- There’s a significant deficit of more than 1 million US homes
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A lack of existing homes for sale and robust demand are fueling a rally in homebuilder stocks, according to Citigroup.
The sector gauge outperformed the S&P 500 Index last week, rising as much as 3% compared with a 1.4% decline in the broader gauge. Both indexes slipped about 0.5% on Monday as traders weighed the Federal Reserve’s next move on interest rates this year. The housing supply shortage is lifting homebuilders, despite a strong May housing starts print that led investors to wonder if the market is in the early stages of overbuilding, Citigroup said in a note on Monday.