- Despite concerns about interest rates continuing to rise, Sterne Agee's Jay McCanless says there will be more, not less mortgage financing available (makes sense as suppliers generally offer more product when prices rise). The timing, however, is uncertain, and McCanless is cautious about housing demand in Q1, but bullish for the full year - he expects 2014 order growth of 16.4%, 230 basis points higher than consensus.
- What about the more rigid QM (qualified mortgage) rules? Originators are already - on average - underwriting to tighter standards than the new rules set for release by the CFPB on January 10, says McCanless.
- He thinks D.R. Horton (DHI -2.4%) is particularly well-positioned to take advantage. "We believe the lack of open communities has hindered sales and unit order growth for several builders during 2013, and we estimate community count growth could resolve some of these issues."
- Related ETFs: XHB, ITB, PKB
Housing demand to be boosted by wider access to credit
Jan 2 2014, 11:09 ET