5 Reasons Why the Housing Market Recovery Won't Last

Toll Brothers
Toll Brothers

Investors seem to be loving homebuilders these days.

Shares of Lennar (LEN) hit a five-year high last week. Toll Brothers (TOL) followed through fresh five-year peak on Monday.

It's easy to get excited about the bellwethers. Home prices have finally started to inch higher. Developers are growing their bottom lines and their cancellation rates are shrinking. There may be a few laggards out there, but the trend is generally upbeat.

Analysts see Lennar and Toll Brothers growing their revenue 26% and 23% respectively this year, and are looking for those rates to accelerate in the next fiscal year.

However, hold your applause: It may be too early to start calling this an actual housing recovery.

Yes, homebuilder stocks have bounced back. But there are plenty of favorable tailwinds that can whirl back around and become battering headwinds pretty soon.


Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.