The SPDR S&P Homebuilders ETF is absolutely taking the brunt of the current macroeconomic environment, now down nearly 30% for the year. Still, Bill Smead has a positive outlook on the homebuilder stocks.
Smead is bullish on homebuilders for the long term
Smead agrees the near-term environment for homebuilders will likely remain challenging, but he remains bullish on the sector as a long-term bet. On CNBC’s “The Exchange”, he said:
We have massively underbuilt homes in the prior ten to twelve years. Homebuilders can sell every home they built, but supply chain issues and labour kept them away from exploding to the upside, which elongates the next five-to-ten-year cycle for the homebuilders.
Last month, the second-largest U.S. homebuilder, Lennar Corp, reported better-than-expected profit for its fiscal first quarter.
Smead quotes statistics to support his view
The CIO of Smead Capital Management quoted statistical figures to bolster his positive view (five to ten years out) on the homebuilder stocks. Speaking with CNBC’s Kelly Evans, he added:
“There were 236 million people in the U.S. in 1983, we built 627,000 new homes. Now we have 334 million people. Last year, we built 773,000 new homes. And the market share of the five largest builders tripled during that time period.”
Last week, JPMorgan’s Jacob Manoukian – the U.S. head of investment strategy, said a recession in the near-term was possible, but not probable.
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