Housing Rebound in 2026? 3 Homebuilder Stocks to Buy Now

The housing market in the United States has been oscillating between hot and cold waters for almost the entire year 2025, due to fluctuating homebuyers’ confidence, interest rate concerns and tariff-related risks. However, the declining trends of the mortgage rates from August 2025 started to ease the market with three consecutive Fed rate cuts between September and December, further catalyzing the positive trends.

The Zacks Building Products - Home Builders industry’s share price performance is standing below the broader Construction sector’s performance in the past six months. Although the current performance of the industry is riding below the sector, the mid and long-term prospects of the industry look promising.

With the hopeful trajectory of the U.S. homebuilding industry, we have bundled three stocks that are expected to rebound amid a cautious macro environment in 2026. The homebuilder stocks include Century Communities, Inc. CCS, D.R. Horton, Inc. DHI and Lennar Corporation LEN.

Understanding the Market Scenario

After years of sluggish activity due to elevated mortgage rates and tight affordability, the U.S. housing market in late 2025 showed early signs of life. As of the recent report by the National Association of Realtors (NAR), existing home sales inched up 0.5% month over month in November 2025 to an annualized rate of 4.13 million units, the highest in the past nine months. The sale of single-family homes increased 0.8% month over month to a seasonally adjusted annual rate of 3.75 million in November 2025.

For 2026, the NAR expects a positive rebound of the housing market, expecting a 14% increase in existing home sales, fueled by better inventory, improved affordability and potentially lower mortgage rates. This would represent the first notable rebound after several years of relative stagnation. Besides, modest job growth, steady demographic demand from millennials entering peak homebuying years and a slight easing of financing costs form the backdrop for a more balanced market.

Mortgage Rate & Fed Rate Trends

The easing of mortgage rates and a declining Fed rate have boosted homebuyers’ confidence to some extent. The average 30-year mortgage rate, for the week ending Nov. 26, 2025, was 6.23%, down from 6.81% for the week ending Nov. 27, 2024. Moreover, the mortgage rate as of the week ending Dec. 18, 2025, was 6.21%, down from 6.72% as of Dec. 19, 2024. Moreover, on Dec. 10, 2025, the Federal Reserve slashed its interest rates by another 0.25 percentage points, setting the benchmark between 3.5% and 3.75%. After these cuts, the Federal Open Market Committee, or FOMC, is now expecting only one rate cut in 2026, with another one anticipated in 2027.

Summing up, declining mortgage rates and potential Fed interest-rate cuts improve housing affordability by lowering monthly payments, allowing more first-time and move-up buyers to re-enter the market. Easier financial conditions also support consumer confidence, job stability and access to credit, encouraging home purchases. Together, these factors support a volume-driven housing recovery in 2026, even if price growth remains modest and disciplined rather than speculative.

Three Homebuilding Stocks to Look Forward to in 2026

Using the Zacks Stock Screener, we have identified three homebuilding stocks that appear poised for a cautious but positive rebound in 2026, propelled by modestly lower mortgage rates, incremental inventory growth and returning buyer confidence. The renowned homebuilders, Century Communities, D.R. Horton and Lennar, are positioning themselves for growth through their in-house efforts amid a favorable market scenario. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Six-Month Period Stock Performance

Century Communities: Century Communities’ focus on affordable single-family homes and a land-light operational model has been boding well in the weak housing scenario. It offers move-in-ready homes priced below FHA limits, a key advantage if buyer affordability improves as mortgage rates ease. The company also integrates mortgage, title and insurance services, which enhances customer conversion and adds fee-based revenues. While Century Communities has faced margin pressures and demand softness amid higher rates, its expanding community count, land pipeline and strategic acquisitions position it to capture share when housing demand rebounds in 2026.

CCS stock presently carries a Zacks Rank #2 (Buy) and has moved up 7.9% in the past six months. It has a trailing four-quarter earnings surprise of 20.4%, on average. The sales and earnings per share (EPS) estimates for 2026 are expected to increase year over year by 7.2% and 34.2%, respectively.

Lennar: Lennar has been navigating a challenging market through a combination of operational discipline and strategic acquisitions, including its expansion into new regional markets. Its new orders and backlog remain substantial, and its ability to offer mortgage financing and title services in-house gives it an edge in converting traffic into sales. LEN’s home deliveries in the fourth quarter of fiscal 2025 grew year over year by 3.7% to 23,034 units, with new orders increasing 18.5% to 20,018 units. Its focus on an asset-light & land-light model and technology-driven transformation bodes well for upcoming growth.

LEN stock currently carries a Zacks Rank #3 (Hold) and has trickled down 2.4% in the past six months. It has a trailing four-quarter earnings surprise of 1.6%, on average. The sales and EPS estimates for fiscal 2026 are expected to improve year over year by 0.2% and 5%, respectively.

D.R. Horton: D.R. Horton’s focus on affordable single-family homes to capture demand from first-time buyers and move-up buyers, alongside improving operational efficiency, continues to strengthen its market position. Besides, its homebuilding investments in lots, land and development are boding well. At the end of Sept. 30, 2025, the company’s homebuilding lot position was 592,000 lots, wherein 25% were owned and 75% were controlled through purchase contracts. In the fourth quarter of fiscal 2025, net sales orders improved 5% year over year to 20,078, with the value of net orders increasing to $7.33 billion from $7.15 billion.

DHI stock presently carries a Zacks Rank of 3 and has risen 14.4% in the past six months. It has a trailing four-quarter earnings surprise of 3.5%, on average. Although the EPS estimates for fiscal 2026 are expected to inch down year over year by 1.2%, the sales estimates are expected to improve 0.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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