Veteran analyst Ivy Zelman is upbeat now on home builders and mortgage insurers as the economy struggles to return to a “new normal” in the wake of the coronavirus pandemic.

“Over the past several years, new homes have been taking market share from resales, as builders have increasingly been adding affordable supply to the inventory-starved entry-level segment,” the CEO of research and investment firm Zelman & Associates recently told Barron’s.

“In 2019, new homes represented 13% of total home sales in the U.S., up from a trough of just 7% in 2011. In the near term, we believe new homes will continue to take share, as homeowners pull listings from the market due to health concerns over having strangers visiting their homes,” Zelman said.

“After the pandemic ends, we expect consumers to increasingly favor new homes for the reasons they have for several years—innovative floor plans and technological advancements, including home automation.”

She picked some homebuilder stocks which she see as offering “a compelling value" despite recent tumbles in earnings and share prices amid the pandemic market chaos.

"We expect the major builders to be profitable this year.”

Zelman's Picks:

• Lennar (LEN)
• M/I Homes (MHO)
• PulteGroup (PHM)
• Toll Brothers (TOL)

Meanwhile, homebuilders were doing well before the virus outbreak. Orders for new homes were up 20% in the second quarter, which ended March 31. Those results mostly came in before social-distancing guidelines were widely adopted, keeping potential buyers stuck inside and putting a virtual freeze on the industry, Bloomberg reported.

• 4M Mortgage Payments Paused or Reduced Due to Virus
• House Hacking: Get Your Mortgage to Work for You