Although current expectations indicate that U.S. interest rates may not decrease significantly soon, there’s skepticism about maintaining high rates over an extended period. If interest rates eventually decrease, financing for new homes would become cheaper, stimulating demand for home purchases and, thus, homebuilder stocks.

While inflation remains a concern, prolonged high interest rates could elevate inflation as businesses and consumers adjust expectations and spending accordingly.

If your rent goes up due to inflation, it will never return to the same level again, even when inflation dips by a percentage point or two. That then becomes the new price moving forward.

Also, we will inevitably see the ugly side of the economy sooner or later. If we evaluate when’s the best time to load up on homebuilding stocks purely by the interest rate cycle, we are surely at the peak.

Here are three homebuilder stocks for investors to consider.

D.R. Horton (DHI)

D.R. Horton (NYSE:DHI) is the largest U.S. homebuilder by volume and should be one for investors to keep on their radars.

There has also been a fairly recent development. For fiscal 2024, DHI has adjusted its revenue guidance upwards. The company anticipates consolidated revenues between $36.7 billion and $37.7 billion. This represents an increase from earlier projections, which ranged from $36.0 billion to $37.3 billion​.

Regarding performance for the first quarter of fiscal 2024, DHI reported stable earnings despite market headwinds. The company declared a quarterly dividend of $0.30 per share. Its net income was slightly down by 1% year-over-year at $947.4 million, but diluted earnings per share increased to $2.82 from $2.76. 

DHI then has solid momentum behind it, and being the largest homebuilder in the U.S. positions it as a serious beneficiary of falling interest rates as the market heats up.

M/I Homes (MHO)

M/I Homes (NYSE:MHO) has recently experienced a significant increase in hedge fund ownership, signaling investor confidence.

MHO has a robust plan for 2024, focusing on new home construction and a wide range of community developments across various locations. For the upcoming year, MHO plans to expand its offerings in key markets, including continuing developments in Central Ohio, where it has already been established as a leading builder.

MHO is also in a very stable position. The company achieved record shareholders’ equity of $1.6 billion last quarter, reflecting a notable increase of 29% from the previous year. Additionally, MHO ended the year with a cash balance of $236 million and no borrowings on its $550 million credit facility.

These factors then position MHO as one of the top homebuilder stocks to buy due to its recent results and accretive outlook.

Meritage Homes (MTH)

Meritage Homes (NYSE:MTH) targets primarily entry-level and first-move-up buyers across several U.S. states.

This is because MTH caters to the younger crowd. Falling interest rates may benefit them the most, as high rates could be gatekeeping them from joining the property ladder. Thus, MTH will be an especially strong pick for the next couple of years.

In Q4 of 2023, MTH reported $5.38 per share, exceeding analyst expectations. Revenue for the quarter stood at $1.65 billion, surpassing the estimated $1.52 billion. These results indicate a robust close to the year.

Also, for 2024, MTH has projected earnings per share to range from $16.38 to $18.75. This reflects a strong EPS growth potential on behalf of MTH, and we are very likely at the peak of the interest rate cycle.

All the right factors are in MTH’s favor, and it’s a homebuilder stock investors should buy in April.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.