T
he housing market's spring awakening is being met with a lukewarm reception from homebuyers, as mortgage demand continues to dwindle. Despite an uptick in listings, the average time to sell a home has reached 54 days, its longest stretch since March 2020. This trend suggests that even with more inventory available, buyers remain hesitant to enter the market.

    The supply of homes for sale is up 25% year-over-year, but this gain comes from properties lingering on the market longer rather than new listings. Redfin's data reveals a stark contrast between current and past sales periods, with January's average time to sell lagging behind January 2019 by 25%.

    Affordability remains a pressing concern, as home prices continue to rise in all 50 of the most populous US metropolitan areas. According to Redfin Senior Economist Elijah de la Campa, even traditionally affordable regions like Texas and Florida are now seeing price increases. This trend is expected to drive more renters into the market, with rental affordability poised to improve as supply grows.

    Brown Harris Stevens CEO Bess Freedman recently shared her insights on the current state of housing affordability. She believes mortgage rates will remain in the 6% range for an extended period and may only dip slightly lower. This rate sensitivity is particularly concerning for first-time homebuyers, who are increasingly delaying their purchases until later in life.

    To identify the top residential real estate stocks, we began by screening for companies with the largest market caps. From this pool, we selected the 12 stocks with the highest average upside potential as of February 5. These stocks have been ranked in ascending order of their projected growth, offering a snapshot of the most promising opportunities in the sector.