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Who Could Win, Lose As US Homebuilding Starts Decline: Home Depot 'Performing Well' During Coronavirus Crisis

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Who Could Win, Lose As US Homebuilding Starts Decline: Home Depot 'Performing Well' During Coronavirus Crisis

The coronavirus capped groundbreaking on U.S. homebuilding projects at a five-year low for the month of April, according to a Tuesday report from the Commerce Department.

“Due to recent events surrounding COVID-19, many governments and businesses are operating on a limited capacity or have ceased operations completely,” the U.S. Census Bureau said in its report.

The Housing Report Details

Housing starts fell to a seasonally adjusted annual rate of 891,000 units, representing a 30.2% month-over-month decline and 29.7% year-over-year decline. In a Reuters poll, economists had forecasted 927,000 units.

Building permits also fell 20.8% sequentially and 19.2% year-over-year to 1.07 million. The west and northeast regions took the brunt of the hit.

Home Depot 

So far, home improvement companies have proven value in the coronavirus environment. Despite realizing $640 million in post-tax coronavirus costs, Home Depot Inc (NYSE: HD) recorded a profit and positive comps in its February-March-April quarter as idle workers flocked to the essential business to complete home repairs.

“I think Home Depot is one of the companies that is benefiting or really capitalizing, performing well through this Covid-19 crisis and is likely to perform well as the crisis headwinds abate,” Oppenheimer analyst Brian Nagel told CNBC.

“More people are spending more time in their homes, and you’re seeing that increase spend as more people spend more time working on their houses.”

A slowdown in B2B sales could hurt, though. Declines in housing projects could cripple homebuilders, whose slow business could trickle down to suppliers. The following stocks may be worth watching as U.S. trends solidify:

  • Beazer Homes USA, Inc. (NYSE: BZH)
  • Cavco Industries, Inc. (NASDAQ: CVCO)
  • Century Communities Inc (NYSE: CCS)
  • Comstock Holding Companies Inc (NASDAQ: CHCI)
  • D.R. Horton Inc (NYSE: DHI)
  • Eagle Materials, Inc. (NYSE: EXP)
  • Frontdoor Inc (NASDAQ: FTDR)
  • Green Brick Partners Inc (NASDAQ: GRBK)
  • Hovnanian Enterprises, Inc. (NYSE: HOV)
  • KB Home (NYSE: KBH)
  • Legacy Housing Corp (NASDAQ: LEGH)
  • Lennar Corporation (NYSE: LEN)
  • LGI Homes Inc (NASDAQ: LGIH)
  • Lowe’s Companies, Inc. (NYSE: LOW)
  • M.D.C. Holdings, Inc. (NYSE: MDC)
  • Meritage Homes Corp (NYSE: MTH)
  • M/I Homes Inc (NYSE: MHO)
  • New Home Company Inc (NYSE: NWHM)
  • NVR, Inc. (NYSE: NVR)
  • Patrick Industries, Inc. (NASDAQ: PATK)
  • PulteGroup, Inc. (NYSE: PHM)
  • Skyline Champion Corp (NYSE: SKY)
  • Taylor Morrison Home Corp (NYSE: TMHC)
  • Toll Brothers Inc (NYSE: TOL)
  • TRI Pointe Group Inc (NYSE: TPH)
 

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