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.

Source: Bloomberg, Macrobond, Variant Perception

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.

Source: Bloomberg, Macrobond, Variant Perception

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.

To find out more, click here: variantperception.com.