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  • Alex Pettee, CFA

Homebuilders: Rate Cuts Add Fuel To Resurgent Housing Market

  • Homebuilders - which helped to power the economy up the "wall-of-worry" last year - may be a significant beneficiary of the sharp plunge in long-term interest rates amid coronavirus concerns.

  • Mortgage rates breached historic lows this week, providing a tailwind for the US housing industry - and homeowners - that could be a silver-lining to offset a near-term economic slowdown.

  • After dipping nearly 40% in 2018, the combination of lower mortgage rates, strong demographic-driven demand, and lower construction materials prices sent homebuilders higher by 50% in 2019.

  • The housing market momentum has continued into 2020, capped off by a "perfect month" in February, defined as better-than-expected reports on all of the major housing data releases.

  • Millennials - the largest generation in American history - are coming full-steam into the single-family housing markets over the next decade during a period of historically low housing supply.

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