Wrapping up Q3 earnings, we look at the numbers and key takeaways for the home builders stocks, including Meritage Homes (NYSE: MTH) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 14.7% since the latest earnings results.

Meritage Homes (NYSE: MTH)

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE: MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Meritage Homes reported revenues of $1.60 billion, down 1.4% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations.

"Our solid third quarter 2024 results reflected the pivot in our strategy to affordable, quick-turning move-in ready homes, which generated $1.6 billion of home closing revenue and our highest third quarter closing volume," said Steven J. Hilton, executive chairman of Meritage Homes.

Unsurprisingly, the stock is down 16.1% since reporting and currently trades at $151.45.

Read our full report on Meritage Homes here, it’s free.

Best Q3: Skyline Champion (NYSE: SKY)

Founded in 1951, Skyline Champion (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $616.9 million, up 32.9% year on year, in line with analysts’ expectations. The business had an exceptional quarter with an impressive beat of analysts’ sales volume estimates and a solid beat of analysts’ EBITDA estimates.

The market seems content with the results as the stock is up 4.4% since reporting. It currently trades at $94.92.

Is now the time to buy Skyline Champion? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: D.R. Horton (NYSE: DHI)

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.

D.R. Horton reported revenues of $10 billion, down 4.8% year on year, falling short of analysts’ expectations by 1.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.

D.R. Horton delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 23.5% since the results and currently trades at $138.

Read our full analysis of D.R. Horton’s results here.

Taylor Morrison Home (NYSE: TMHC)

Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.

Taylor Morrison Home reported revenues of $2.12 billion, up 26.6% year on year. This result surpassed analysts’ expectations by 7.8%. It was a very strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.

The stock is down 9.1% since reporting and currently trades at $58.97.

Read our full, actionable report on Taylor Morrison Home here, it’s free.

KB Home (NYSE: KBH)

The first homebuilder to be listed on the NYSE, KB Home (NYSE: KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.

KB Home reported revenues of $1.75 billion, up 10.4% year on year. This print topped analysts’ expectations by 1.4%. Zooming out, it was a softer quarter as it logged full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.

KB Home had the weakest full-year guidance update among its peers. The stock is down 25.1% since reporting and currently trades at $65.50.

Read our full, actionable report on KB Home here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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