Advanced Micro Devices, Inc. (AMD)

Daily Spotlight: New Home Sales May Rise 5% Next YearHigh mortgage rates are weighing on builders' confidence, but there are reasons to be optimistic. The National Association of Home Builders said that builder sentiment was down for a fourth consecutive month in November, but housing conditions may improve in the coming months helped by a recent decline in Treasury rates. The NAHB is forecasting a 5% increase in single-family starts in 2024 as "financial conditions ease with improving inflation data in the months ahead." D.R. Horton, the largest U.S. builder, could be a beneficiary. The company's fiscal 4Q orders jumped 39% even with high mortgage rates. On the company's November 7 earnings call, Chairman Donald Horton offered the following: "The supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable." DHI offered incentives to keep prices affordable and plans to continue them in 2024. The company's board showed its confidence by raising the full-year dividend by 20%. Existing-home sales for October declined 14.6% from prior-year levels to 3.79 million homes at a seasonally adjusted annual rate. We expect new-home sales for October to rise to 700,000 (SAAR) from 577,000 a year earlier, but decline from 759,000 in September. The S&P/Case-Shiller National Home Price Index for September will be released on November 28. With inventories tight and unemployment low, we expect home prices to remain elevated. The Zillow Home Value Index was up 1.1% YOY in September and up 1.8% in October. In this tumultuous housing market, Argus recommends Lennar, D.R. Horton, and Toll Brothers -- companies with solid financial strength that are adapting to market conditions.