Heightened demand for new homes amid the low interest rate environment, low inventories and rising input costs have heated the residential construction market to red hot over the past year. And because the demand for homes is still on the rise, we believe two prominent players in this space, D.R. Horton (DHI) and Tri Pointe (NYSE:TPH), should keep thriving. But let’s find out which of these stocks is a better buy now.D.R. Horton, Inc. (DHI) is a homebuilding company that acquires and develops land and constructs and sells homes. The Fort Worth, Tex., company also provides mortgage financing services, title insurance policies, and examination and closing services. It engages in the residential lot development business and owns and operates oil and gas-related assets.
Tri Pointe Homes , Inc. (TPH) in Irvine, Calif., designs, constructs and sells single-family residential homes. The company sells its homes through its own sales representatives and independent real estate brokers. It also provides financial services, such as mortgage financing, title and escrow, and property and casualty insurance agency services.
The pandemic-induced home-bound lifestyle over the past year has built up demand for bigger houses in the suburban areas over the past year. This, along with a favorable mortgage rate environment, has fostered soaring demand for housing. The rising costs of raw materials, such as lumber, and low housing inventory, have caused home prices to spike. And because the housing market remains red hot because of the continuing high demand despite gradual inventory improvement, the residential construction industry should witness solid growth.