Going into the coronavirus, the housing market was one of the bright spots for the economy. The sector had been in a stealth bull market since 2013, and it could be argued that its strength was the one reason why the economy never slipped into a recession for the latter part of the bull market. Housing is connected to so many different parts of the economy and form the backbone of household balance sheets.
It's turned out that post-coronavirus, housing is also one of the strongest parts of the economy. The fundamentals of housing are strong - low housing supply and record-low mortgage rates. In this mix, the coronavirus has created a surge in demand with urban-dwellers looking to move to the suburbs or rural areas. This has dwarfed any sort of economic uncertainty that may have dented housing demand.
This is a continuation of an earlier theme that the coronavirus has been an accelerator of trends rather than a reversal like previous recessions. The same thing has happened with mega-cap tech and cloud computing stocks which were leaders going into the coronavirus crash and emerged even stronger from a business and stock price perspective.
Lagging Stocks
Many stocks exposed to housing have recovered and are at new highs, but there are a couple of compelling laggards. These stocks could rapidly rise in the coming months as long as the housing market's strength persists. There's good reason to believe this is the case given demographics, the Federal Reserve's commitment to keeping rates low till 2022, and forward-looking indicators like lumber prices.
Martin Marrietta Materials
Radian Group
Tronox