The housing market remains strong in 2025, with high demand for new homes and renovations driving growth. Companies are capitalizing on this trend, focusing on construction and home improvement to meet evolving consumer needs.

Given the industry’s tailwinds, investors could consider buying fundamentally sound house-related stocks, Sekisui House, Ltd. (SKHSY), M/I Homes, Inc. (MHO), and Skanska AB (publ) (SKBSY) for market gains.

As the U.S. population continues to grow, especially among millennials and Gen Z, there is sustained demand for new homes. Many young people are reaching prime home-buying ages and are seeking larger homes or homes in suburban or rural areas. IMARC Group expects the building construction market to grow at a CAGR of 4.9% by 2033.

The growing population’s need for homes, alongside government incentives and policies, is also felt in the global industry. The world’s residential building construction market is expected to reach $6.02 trillion by 2029, growing at a CAGR of 6.6%.

Considering these encouraging trends, let’s take a look at the fundamentals of the three best Homebuilders stocks, starting with #3.

Stock #3: Sekisui House, Ltd. (SKHSY)

SKHSY designs, constructs, and contracts built-to-order detached houses in Japan and internationally. The company operates through Custom Detached Houses; Rental Housing; Architectural/Civil Engineering; Remodeling; Real Estate Management Fees; Houses For Sale; Condominiums; Urban Redevelopment; and Overseas segments. 

SKHSY’s trailing-12-month net income margin and EBIT margins of 6.64% and 8.67% are 56.1% and 6.8% higher than the respective industry averages of 4.26% and 8.12%.

During the six months that ended October 31, 2024, SKHSY’s net sales increased 1.6% year-over-year to ¥2.86 billion ($39 million). Its gross profit came in at ¥554.72 million ($75.65 million), up 8.9% from the year-ago quarter. The company reported a profit of ¥167.39 million ($22.83 million), up 12.9% from the prior-year quarter.

Analysts expect SKHSY’s revenue for the fiscal fourth quarter ending January 2025 to increase 18.4% year-over-year to $7.34 billion. The company surpassed its revenue estimates in three of the trailing four quarters, which is promising.

SKHSY’s stock has plunged marginally over the past year to close the last trading session at $22.72.

SKHSY’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a B grade for Stability and Value. It is ranked #3 out of 22 stocks in the Homebuilders industry.

Beyond what is stated above, we’ve also rated SKHSY for Growth, Momentum, Quality, and Sentiment. Get all SKHSY ratings here.

Stock #2: M/I Homes, Inc. (MHO)

MHO engages in the construction and sale of single-family residential homes in Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee. The company operates through Northern Homebuilding, Southern Homebuilding, and Financial Services segments. 

MHO’s trailing-12-month net income margin of 12.54% is 194.6% higher than the industry average of 4.26%. Its trailing-12-month EBIT margin of 15.43% is 90.1% higher than the 8.12% industry average. Also, the stock’s trailing-12-month EBITDA margin of 15.78% is 37.7% higher than the 4.26% industry average.

During the third quarter that ended September 30, 2024, MHO’s total revenue rose 8.6% year-over-year to $1.14 million. The company’s operating income rose 5.7% from the year-ago value to $181.99 million.

Furthermore, the company’s net income and EPS came in at $145.45 million and $5.10, up 4.6% and 5.8% year-over-year, respectively.

Street expects MHO’s revenue and EPS for the fourth quarter (ended December 2024) to increase 20.1% and 32.1% year-over-year to $1.17 billion and $4.83, respectively. Moreover, the company topped the consensus EPS and revenue estimates in three of the four trailing quarters, which is impressive.

MHO’s stock has increased 7.3% over the past nine months to close the last trading session at $126.38.

MHO’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

MHO has a B grade for Growth, Value, and Quality. It is ranked #2 in the same industry.

In addition to the POWR Ratings highlighted above, one can access MHO’s ratings for Momentum, Stability, and Sentiment here.

Stock #1: Skanska AB (publ) (SKBSY)

SKBSY operates as a construction and project development company in the Nordic region, Europe, and the United States. It operates through four segments: Construction, Residential Development, Commercial Property Development, and Investment Properties. 

SKBSY’s trailing-12-month asset turnover ratio of 1.08x is 37% higher than the industry average of 0.79x.

During the third quarter that ended September 28, 2024, SKSBY’s total revenue was reported at SEK42.80 million ($3.80 million), and its operating income stood at SEK1.26 billion ($111.85 million). Furthermore, the company’s profit for the period came in at SEK962 million ($85.39 million).

Street expects SKSBY’s revenue for the fourth quarter (ended December 2024) to increase marginally year-over-year to $4.02 billion.

SKBSY’s stock has increased 13.1% over the past nine months and 17.2% over the past year to close the last trading session at $19.99.

SKBSY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.

SKBSY has a B grade for Value, Growth, and Stability. It is ranked first in the same industry.

Click here to access the additional SKBSY ratings (Momentum, Quality, and Sentiment).

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SKHSY shares were trading at $22.87 per share on Tuesday afternoon, up $0.15 (+0.64%). Year-to-date, SKHSY has declined -4.35%, versus a -0.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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