While the housing sector may be gaining its footing, the improvements are lagging valuations.
"With homebuilding stocks outperforming the market by 3,500 basis points in the last three months, we would wait for a pullback or a clearer picture that housing is healing quicker than it currently is," Pollard writes.
Among homebuilders, Pollard says his team at Goldman prefers PulteGroup because of its turnaround story as well as Toll Brothers, which he says is best in class.
Pollard increased his price target on Pulte to $8, an increase of 23 percent from his previous target, and he raised his target on Toll by 9 percent to $24.
Pollard also hiked his price targets for several other homebuilders.
The price target on KB Home went to $7.50 from $6.50.
Lennar's moved to $18 from $14.50, while MDC Holdings' inched up to $20 from $18.
Pollard raised his target on Meritage Homes to $23 from $18, and increased Ryland Group's to $13 from $11, although he maintained a "sell" rating on Ryland.
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