Structural tailwinds for US homebuilders
Structural tailwinds for US homebuilders
The 2010s marked a lost decade for US homebuilding. The number of homebuilders declined 50% between 2007 and 2012 in the US, and the GFC caused a massive hole in personal savings and equity, meaning that fewer people could afford a home. This drove a shift towards renting and away from owning across all age groups. The supply-demand mismatch is greatest for entry-level single family housing.
Household formation drives demand for housing. Millennials are aging into prime home buying age, so the 30-44 age cohort should see the greatest population growth over the next 5 years. Young adults that were living with their parents are now starting to move out.
This has intensified the structural deficit of entry-level homes. We think this is a very positive structural backdrop, but acknowledge mounting cyclical headwinds. In a recent thematic report, we investigate which homebuilders are best poised to benefit from US housing dynamics.
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