The US real estate market remains strong. Existing home sales across America rose 1.4% in June to a seasonally adjusted annual rate of 5.86 million units, according to the National Association of Realtors. And home prices were even stronger.

Nationwide, US house prices rose 17.2% in June compared to the same month last year – a record high. More than half (50%) of the homes sold in the US this year were above asking price. In such a strong real estate market, certain stocks perform extremely well.

Here are three real estate stocks you should consider to take advantage of the hot real estate market.

  • Lennar (NYSE:LEN)
  • Zillow group (NASDAQ:ZG)
  • Home Depot (NYSE:HD)

From construction companies to real estate agents and suppliers, many companies are benefiting from the current US real estate market and should continue to develop well in the months to come. Let's take a closer look

Real estate stocks for sale for the hot housing market: Lennar (LEN)

Source: Shutterstock

Based in Fontainebleau, Florida, Lennar is the largest home builder in the US With offices in 21 states, no company builds more homes nationwide than LEN.

This company is at the heart of the current real estate boom and LEN stock is a great option for investors looking to gamble in the hot real estate market. In addition, Lennar also has a thriving commercial mortgage loan business.

Since the start of the year, LEN stock is up 43% to $ 105.85 per share. Lennar stock is up 7% last month as the hot streak of the real estate market stretched into the summer months.

Lennar's share price was also boosted by stronger-than-expected results for the fiscal first quarter. The home builder reported earnings per share (EPS) of $ 2.04, well above what Wall Street was expecting to see $ 1.71. Quarterly revenue of $ 5.3 billion also exceeded analyst estimates and was 18% higher than last year.

Industry watchers particularly liked Lennar's prediction that between 62,000 and 64,000 new homes will be built this year and gross profit margin of 25% on their average selling price of $ 400,000. This means that for every home Lennar sells, Lennar will make a profit of $ 100,000.

Zillow Group (ZG)

Source: OpturaDesign / Shutterstock.com

Investors looking for a large US real estate stock at an extremely affordable price have come to the right place with the Zillow Group. The stocks of the online real estate marketplace have been down this year, down 25% since early January to their current price of $ 102.31.

That's a hard-to-swallow pill for investors who bought the stock at its peak earlier this year. In mid-February, the ZG share was quoted at an all-time high of $ 212.40. Then came the rotation from technology stocks to cyclicals and Zillow has been on the downside ever since.

However, opportunistic investors should see ZG shares as for sale right now. Despite the weak development of the share price, a lot is going on at Zillow and the management is taking the right steps to position the company successfully in the long term.

Zillow manages to move the entire home buying and selling process online. Many homeowners in the US are now selling their homes directly to Zillow through the company's direct buying process. In fact, buying and selling homes directly now accounts for nearly 60% of Zillow's sales.

The company's revenue for the second quarter of this year was $ 471.3 million, more than double the $ 213.6 million a year earlier. Zillow's traditional mortgage loan division revenue increased 1,073% year over year in the second quarter.

The strong results enabled Zillow to forecast sales of $ 2 billion for the fourth and final quarters of this year.

Home Depot (HD)

Here's why Home Depot stock is worth buying over retail competitor Lowe

Source: Mihai_Andritoiu / Shutterstock.com

The retailer Home Depot is also experiencing the housing market. Hot housing markets lead to equally searing housing renovation and improvement markets. Plus, Americans have aggressively upgraded their homes since the Covid-19 pandemic forced everyone to work and live at home. That has given Home Depot several new highs over the past 18 months. The Atlanta, Georgia-based company's net sales rose 20% to a record $ 132 billion last year, resulting in a 14% increase in net income.

Home Depot has also taken home builders who buy lumber and other materials. Building materials are Home Depot's biggest top-seller, accounting for 35% of the retailer's sales in 2020 ($ 46.5 billion total). In fact, wood products (a subset of the building materials category) are now Home Depot's third largest sales segment (8.6%), only surpassed by indoor gardening items and tools.

HD stock has been a winner so far in 2021, up 26% year-to-date to $ 332.25 per share. The stock is up 3% over the past month.

Disclosure: On the day of publication, Joel Baglole held long positions in LEN and ZG. He has held positions (neither directly nor indirectly) in the other securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com's posting guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Diary and has also written for The Washington Post and Toronto Star, and financial websites such as The Motley Fool and Investopedia.

source https://seapointrealtors.com/2021/08/12/3-real-estate-stocks-to-buy-for-the-hot-housing-market/

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