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First-time home buyer is back. How to trade it

D.R. Horton bargain home in Houston.
Source: D.R. Horton

The first time home buyer is coming back big this spring as mortgage rates fall and rents increase, according to Wall Street research.

Here's how to trade it.

Susquehanna Group upgraded D.R. Horton on Monday to "buy," predicting that shares of the largest U.S. home builder, which also caters to lower income and first-time buyers, would rise by more than 20 percent during the next 12 months.

"We believe we are in the nascent stages of a recovery in the first-time home buyer," wrote Susquehanna's Jack Micenko. "We see DHI as enjoying 'first mover' advantage on this front."

The 30-year fixed mortgage rate fell to 3.69 percent last week, according to Freddie Mac. This comes as the yield on the 10-year Treasury, which tends to lead loan rates, fell below 2 percent.