ZG - Homebuilders: A V-Shaped Vendetta

• An antihero of the prior financial crisis, Homebuilders have seemingly been on a vendetta over the last six months, asserting themselves as the unexpected leader of the early post-pandemic recovery.
• Homebuilders were slammed at the outset of the pandemic on fears that a coronavirus-induced recession could inflame a repeat of the Great Financial Crisis for the critical U.S. housing.
• Instead, the U.S. housing industry has roared back to life in recent months. New Home Sales, Existing Home Sales, and Home Prices have all seen a substantial reacceleration this year.
• The sharp rebound in housing market activity has been aided by longer-term macroeconomic trends of favorable millennial-led demographics, historically low housing supply, and near-record low mortgage rates.
• Housing remains an “unloved” sector despite the compelling long-term tailwinds at its back. Homebuilders trade at deeply discounted valuations to the S&P 500 despite their stellar growth rates.

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