Dream Finders Homes, Inc. DFH share price performance has slipped 38.6% in the past six months. The company’s stock has underperformed the Zacks Building Products - Home Builders industry, the broader Zacks Construction sector and the S&P 500 index in the same time frame. The detailed price performance can be studied from the chart given below.

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The ongoing affordability concerns surrounding the United States housing market due to high mortgage rates and the increasing trajectory of the homebuilding costs stemming from the newly levied tariffs, especially on imports from China and Canada, are restricting the housing demand and housing starts. Homebuyers are still adjusting to the new normal mortgage rate benchmark, which is creating an adverse impact on homebuilders like
Dream Finders.

However, year to date, DFH (down 9.2%) seems to have been riding above a few of the renowned homebuilders, including KB Home KBH, Toll Brothers, Inc. TOL and Lennar Corporation LEN. Although all the stock price performances of these homebuilders indicate a declining trend, Dream Finders has still managed to linger above its peers. The share price performance of KBH Home, Toll Brothers and Lennar has tumbled 15.3%, 21.4% and 19.3%, respectively.

Despite the ongoing market uncertainties, DFH seems to be benefiting from its in-house business strategies, including an asset-light strategy, focus on increased lot acquisitions and offering entry-level and affordable offerings, along with investing in markets that reflect the low cost of living and solid interstate migration. Also, strategic investments in inorganic initiatives bode well.

Here’s What’s Fostering Dream Finders’ Momentum

Dream Finders operates an asset-light and capital-efficient lot acquisition strategy to seamlessly meet its growth objectives and maintain a healthy liquidity position. Its asset-light strategy includes two variations, finished lot option contracts and land bank option contracts. By undergoing these procedures in an orderly manner, the company can avoid economic losses and discrepancies that can adversely impact its profitability. As of Dec. 31, 2024, DFH controlled 54,698 lots under the finished lot option and land bank option contracts, up from 29,748 lots at 2023-end.

The company’s main focus is to construct and sell single-family homes across entry-level and first-time move-up markets, followed by second-time move-up and active adult markets. It primarily focuses on entry-level and first-time move-up homebuyers because these are the significant sources of demand for its new homes. In the recent report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the housing starts increased 11.2% to 1,501,000 units in February compared with January 2025. This uptrend was mainly backed by increased single-family housing starts and a lack of existing inventory. Considering this data, it can be seen that DFH is expected to benefit in the near term with increased housing starts and deliveries despite the ongoing uncertainties.

In 2024, DFH’s home closings grew 17% year over year to 8,583 units, with homebuilding revenues increasing 18% to $4.4 billion. A high average selling price ($509,249, up 0.6% year over year) and improved homebuilding cycle times benefited the uptrend.

Notably, Dream Finders’ acquisition strategies are encouraging for its prospects, aimed at increasing its customer base and sales pace. On March 7, 2025, DFH’s wholly owned subsidiary, Jet HomeLoans, acquired Cherry Creek Mortgage. Cherry Creek specializes in the origination of mortgage loans to support new build construction lending. With this acquisition, Dream Finders has significantly expanded its Jet HomeLoans' servicing capabilities, reflecting an expanded customer reach and ability to address affordability issues for its homebuyers. Furthermore, on Jan. 23, 2025, DFH acquired the core homebuilding operations and assets of privately-held homebuilder, Liberty Communities, LLC, across the Atlanta, Georgia and Greenville, South Carolina markets. This strategic move will allow Dream Finders to expand in some key housing markets, thus fostering its sales pace, community count and land supply.

Earnings Estimate Trend of Dream Finders

DFH’s earnings estimate trend for 2025 has moved upward 1% in the past 60 days. Although earnings estimates reflect a year-over-year decline of 6% in 2025 and 10.9% in the first quarter, the upward revision indicates the improving analysts’ expectations for the stock, backed by its in-house capabilities.

EPS Trend

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DFH Trading at a Discount

The company’s current valuation is enticing for investors to look into it. DFH stock is currently trading at a discount compared with the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates an attractive option for investors looking for a suitable entry point.

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Include DFH in Portfolio: Yay or Nay?

Per the discussion above, despite the ongoing affordability issues and inflationary environment surrounding the housing market, Dream Finders’ prospects are encouraging. The company’s in-house capabilities, including the focus on market and community count expansion, incentive offerings to counter affordability issues and lot acquisition strategies, are weighing above the macro headwinds. DFH’s efforts to maintain profitability in the current market scenario must not be overlooked by the investors when taking any decisions in favor of the stock.

Its strong fundamentals and future growth trajectory validate its VGM Score of A, backed by a Value Score of A and a Growth Score of B.

Thus, based on the overall discussion and the favorable trends of technical indicators, investors can consider adding this Zacks Rank #2 (Buy) stock to their portfolio for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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