These 3 Housing Stocks Are Laying the Foundation for a Comeback

The housing market is still in rough shape, impacting performance for all companies in the sector—from homebuilders to home improvement companies. However, it may be on track for a recovery, as easing interest rates and home prices have triggered a slow trickle of improvement that is expected to strengthen in 2026. 

With priced-in risks and reliable capital returns, companies such as D.R. Horton (NYSE: DHI), Lowe’s (NYSE: LOW), and Whirlpool (NYSE: WHR) are well-positioned to benefit from improving housing market trends. 2026 may be a pivotal year for their stock price action, which is likely to trend higher in the long term as the underlying businesses grow, sustain cash flow, and drive capital returns for their investors. 

D.R. Horton: The Nation’s Largest Homebuilder at a 25% Discount

D.R. Horton, the largest homebuilder in the United States, faces pressure in 2025 as falling home prices weigh on revenue, despite ongoing volume growth. However, volume increases are key—they help sustain the company’s cash flow and capital return program, including buybacks and dividends.

Although the company's guidance includes a reduced forecast for share buybacks, buybacks are expected to remain robust at approximately 5.8% of the late-November market cap.

This is in addition to the nearly 10% decline posted in FY2025 and will likely be sustained if not increased in the subsequent year as the housing recovery strengthens.

The DHI dividend is average, yielding about 1.25% while trading near $145, but it is reliable and growing at triple the pace of inflation.

The payout ratio is below 15% of earnings, and share buybacks help support per-share metrics by offsetting the impact of annual dividend increases.

The latest was worth 13% for investors, and another substantial increase is likely in 2026. 

Analyst sentiment is mixed, with a few price target reductions offsetting increases, but ultimately bullish because the revisions fall within a range around the consensus, and institutions are buying. The consensus offers a small, single-digit upside in 2025, but is likely to trend higher over time. Institutional activity is more robust, with them owning more than 90% of the stock and buying at a pace of more than $2 for every $1 sold in the first half of Q4. 

Lowe’s Poised to Trend Higher in 2026 on Expanding Pro Exposure

Lowe’s fiscal Q3 release highlighted resilience compared to Home Depot, largely because of lower exposure to storm-related disruptions.

The key highlight was growth in its professional contractor market, supported by the strategic acquisition of Foundation Building Materials.

While no buybacks occurred in Q3 due to capital preservation during the acquisition, share repurchases earlier in fiscal 2025 reduced the share count by roughly 1%. Buybacks are expected to resume in 2026 as free cash flow improves.

Lowe's also offers an attractive dividend yield of over 2% which is expected to grow at a low single-digit pace annually. 

Whirlpool: A 5% Yield and Stock Price That Can Double

Whirlpool’s (NYSE: WHR) stock price is trading near long-term lows due to struggles with tariffs, competition, and a dividend cut. However, the sell-off has overextended, and a rebound may be coming for this appliance manufacturer. 

Although cut, the dividend yield is still solid at nearly 5% and the payout ratio is below 65%, making it reasonably in line with other blue-chips of its size.

Earnings growth is forecasted to resume in FY2026 and accelerate in FY2027 demand for appliances. 

Analyst coverage is tepid, but aligns with a stock price rebound, forecasting a 15% upside at the consensus.

The more telling indicator is the institutional activity, which has netted approximately $3 in shares for each $1 sold in 2025.

By owning more than 90% of the stock, institutions provide a solid base that is likely to remain solid in 2026. The stock now trades near levels not seen since the COVID-19 crash of 2020, suggesting significant upside potential from here.

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