Will Higher Rates Derail Housing Recovery? Goldman Comments (RYL) (MTH) (TOL)

Homebuilder stocks have been under the microscope lately, as investors await data on how higher interest rates will impact the housing recovery. With rates up over the past two months, impacts should begin to show up fairly soon, thinks Goldman Sachs analyst Eli Hackel. In his view, slowly rising rates will not materially impact the housing recovery.

"Our conversations with industry participants suggest that the move higher in rates has motivated some buyers to purchase before rates potentially go even higher," said Hackel. "We maintain our view that slowly rising rates will not materially impact the housing recovery, and if higher rates are accompanied by an improving economy, it will result in a more beneficial scenario over the long term than just low rates."

Hackel favors companies with attractive geographical exposures and companies that sell to 'move up' and luxury buyers. His firm has a Conviction-list Buy on Ryland (NYSE: RYL), and a Buy-ratings on Meritage (NYSE: MTH) and Toll Brothers (NYSE: TOL). PulteGroup, Inc. (NYSE: PHM) and Hovnanian (NYSE: HOV) are rated Sell.

The remains stocks in the group, including Beazer Homes (NYSE: BZH), D.R. Horton, Inc. (NYSE: DHI) KBH, Lennar Corp. (NYSE: LEN), M.D.C. Holdings (NYSE: MDC) NVR, Inc. (NYSE: NVR) and Taylor Morrison Home Corp. (NYSE: TMHC) are rated Neutral by Goldman Sachs.

For an analyst ratings summary and ratings history on Ryland Group (NYSE: RYL)click here. For more ratings news on Ryland Group click here.

Shares of Ryland Group closed at $41.15 yesterday.

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