• Alex Pettee, CFA

Homebuilders: Relief Has Arrived

  • For the full report, click to visit Seeking Alpha!

  • After their worst year since the financial crisis, homebuilders were left for dead in late 2018. The sector has roared back to life in 2019, powered by receding mortgage rates.

  • Perhaps an echo of 2013, rising rates significantly slowed the single family markets to near-zero growth in 2018. Housing data - starts, sales, and prices - all softened considerably late last year.

  • The homeownership rate climbed to a four-year high in the fourth quarter of 2018 despite continued affordability challenges. Demographics in the 2020s are highly favorable for continued household formation growth.

  • The ten largest homebuilders accounted for a quarter of all home construction in the US in 2018. Homebuilding economics remain brutally challenging for all but the most operationally efficient builders.

  • By most metrics, the overall US housing markets remain significantly undersupplied, an imbalance that further widened in 2018. Supply growth is the most effective antidote for rising housing costs.



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