The Top 3 Homebuilder Stocks to Buy Now All of this supports the idea that adding shares of the best homebuilder stocks could be a smart decision, especially with the way that many of these...

It's been nothing short of fascinating to see all of the changes that have occurred in the real estate market since the beginning of the pandemic. Last year, the unfortunate circumstances led to one of the hottest home-buying sprees of all time and created a feeding frenzy of buyers trying to find new homes in a sellers' market. With people leaving urban areas for the suburbs in droves and record-low interest rates boosting demand, many of the largest homebuilders in the country simply could not keep up with all of the buyers. The pandemic also created several supply chain disruptions that made the supply of rental homes and homes for sale even more limited.

Flash forward a year later and there is no end in sight for the housing inventory shortage, with some experts under the impression that it will last for many more years to come. That means many of the top homebuilder companies will be very busy trying to keep up with the red-hot real estate market. All of this supports the idea that adding shares of the best homebuilder stocks could be a smart decision, especially with the way that many of these stocks have been consolidating over the last few months.

Here is a look at the top 3 homebuilder stocks to buy now:

Lennar Corporation (NYSE: LEN)

This is without a doubt one of the best quality home builders to consider owning for the long-term, especially considering that it's the largest home construction company in the country. In addition to building affordable, move-up, and active adult home communities, Lennar Corporation offers financial services including mortgage financing for homebuyers, which is a part of the company's business that is flourishing in the current low-interest-rate environment. It's also worth noting that Lennar has a lot of communities in the Sun Belt, which is an area of the country with one of the fastest-growing real estate markets. The company also has properties in Florida, Texas, and the Carolinas, which are more areas seeing tons of new residents.

The bull thesis for Lennar Corporation is similar to most other homebuilders at this time. More homes are desperately needed, fast. That means Lennar Corporation is poised to benefit from strong pricing power for as long as the supply/demand imbalance remains a factor in the real estate market. The stock has rallied over 41% year-to-date and is trading right around its all-time highs, so keep an eye on this one for a breakout in the coming weeks.

D.R. Horton, Inc (NYSE: DHI)

It's always a good idea to focus on owning the market leaders in a given sector, which is certainly a good way to describe D.R. Horton Inc. Like Lennar, it's one of the largest publicly traded U.S. homebuilders by market capitalization, revenues, and number of homes delivered, and a great way to play the red-hot housing market. The company offers homes for entry-level, move-up, luxury buyers, and active adults and also offers mortgage financing, which means that this company is essentially a one-stop-shop for homebuyers.

One of the advantages that stands out with D.R. Horton is that the company offers some of the most affordable starter homes on the market with its Express-Homes brand. These are homes that are very attractive to entry-level buyers, which is worth mentioning as many millennials are interested in buying homes but find themselves priced out of most options on the market at this time. D.R. Horton delivered impressive Q3 earnings results back in July that included a consolidated revenue increase of 35% to $7.3 billion along with net income per diluted share up 78% year-over-year to $3.06. Finally, the dividend payouts and share repurchase program make D.R. Horton a fantastic option for long-term investors to consider.

SPDR S&P Homebuilders ETF (NYSEARCA: XHB)

While the two names mentioned above are both fine options to consider given their financial health and well-known brand names, another great way to play the strength in homebuilders is with this ETF. The SPDR S&P Homebuilders ETF uses an equal-weighted approach to track the S&P Homebuilders Select Industry Index, which means investors get a nice mix of both small and large companies in the industry. There's also a lot to like about the fund's blended strategy, which combines both growth and value stocks into one ETF.

Some of the top holdings in this ETF include Floor & Décor Holdings, Carrier Global, Lennar Corporation, Builders FirstSource, Williams-Sonoma, Home Depot, Lowe's, D.R. Horton, and Toll Brothers. As you can tell, in addition to top homebuilders, this ETF contains building products companies and home improvement retailers, which have also been benefitting from a strong housing market. If you are interested in a diversified mix of companies that provide exposure to home building, the SPDR S&P Homebuilders ETF certainly fits the bill.

D.R. Horton is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.