Investors in United Homes Group (NASDAQ:UHG) are ending the first quarter with a wave of good news. That’s as UHG stock exploded higher on Friday, up more than 120% at one point and was up more than 75% at the last check.
Shares are erupting higher after the SPAC merger between Great Southern Homes Inc SPAC and DiamondHead Holdings Corp closed. Now known as United Homes Group, the company is a homebuilder in the Southeast U.S. The merger was announced back in September 2022 at a value of $572 million.
According to CEO Michael Nieri: “We currently have a strong presence in some of the best markets in the southeast and look forward to expanding our geographic footprint with the proceeds from this transaction.”
Nieri added that the company hopes to expand into new markets. For now, the firm operates primarily in South Carolina and Georgia, specializing “in building entry-level and first move-up homes.”
Looking at UHG Stock Going Forward
While specializing in different parts of the country and catering to clients of various wealth, the homebuilders have told a pretty good story so far through the first quarter. The iShares US Home Construction ETF (BATS:ITB) is up almost 15% so far in the first quarter. That’s more than double the S&P 500’s Q1 return.
The housing market has not taken a huge turn for the worst as many investors predicted. Many believed that the Federal Reserve’s rapid rise in interest rates — and as a result, higher mortgage rates — would deal a crippling blow to the housing market.
While analysts and investors alike still expect the housing market to undergo a soft stretch, the demise of the sector has been greatly exaggerated. At least so far.
Toll Brothers (NYSE:TOL) and KB Home (NYSE:KBH) have stormed higher, up 19.3% and 24.7% so far this year, respectively. Lennar (NYSE:LEN) is up about 15% in the quarter and all three companies most recently delivered a top- and bottom-line beat.
As it pertains to UHG stock, investors are bullish for the simple fact that the stock market has been doing fine and the SPAC merger closed.
Second, housing continues to do pretty well. Even more so, investors know that demand remains strong for entry-level and first-move-up homes, making them bullish on UHG stock.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.