J.P. Morgan expects tougher 2025 for US homebuilders

Century Communities

13/12/2024 18:22

(Updates)
    ** Brokerage J.P. Morgan expects less supportive
demand/supply environment for U.S. homebuilders in 2025
    ** Brokerage says key factors driving housing demand such as
interest rates, job growth, and affordability are unlikely to
see significant improvements in 2025 
    ** J.P. Morgan says homebuilders' margin and ROE will likely
fall in 2025
    ** Brokerage downgrades D.R. Horton  DHI.N  to "underweight"
and both Toll Brothers  TOL.N  and Meritage Homes Corp  MTH.N 
to "neutral"; cuts PTs for all three
    ** Brokerage upgrades Century Communities  CCS.N  to
"neutral" from "underweight", citing "stock’s solid relative
underperformance in 2024, down 7% vs our universe’s average 12%
gain"
    ** "We also see the incoming Trump administration’s policies
as potentially disrupting housing’s labor force, as immigrants
account for the largest percentage of U.S. construction workers
since 2004" - Brokerage 
        ** MTH falls 5.1%, TOL falls 3.8% and DHI falls ~2% in
afternoon trading
  
        ** Shares of PulteGroup  PHM.N  slip 2.5% while KB Home
 KBH.N  down 3.1%
  
    ** As of last close, the S&P Composite 1500 Homebuilding Sub
Index  .SPCOMHOME  up 10%, YTD
   

 (Reporting by Rupali Chaudhary in Bengaluru)
 ((Rupali.Chaudhary@thomsonreuters.com))