• (this doc) Home Building Industry
• Lumber Industry
• Home Materials, Furnishings
• Home Appliances, Furniture, Furnishings Retailers

• Land Investing, Land Banks

• Part of Series (this doc) Invest - GeoPolitics - Military - History - Humanities

• Scr Geo-Politics

Invest4US

Thesis

Hennessey Funds rebalanced Oct'19 with 7/10 discretionary in strong home builders and Furnishings representation.

Housing Bubbles and Busts

Home Building Trends

U.S. housing starts bounced back by Mar 2021, hitting their highest level since 2006. According to government data, residential starts increased 19.4% to a 1.74 million annualized rate.

Interest Rates Key factor - to remain low to 2024

Federal Reserve Chair Jerome Powell has outlined that most Fed policymakers don’t see raising interest rates until 2024.

As global esp EU (10yr negative 2%), Japan, China are ultra low government bonds - in contrast Mortgage rates even at 3% are a much better return.

These factors should keep mortgage rates low and help sustain construction activity.

3-10 year backlog of Homes

Freddie estimates in April 2021 the U.S. is about 3.8 million houses shy of meeting demand, thanks largely to the lack of construction following the 2008 housing crash.

When you think about the amount of housing that we’re going to have to build in the U.S. over the next three, five, 10 years, that’s just a significant amount of demand for wood products. - WY CEO

Jun'21 Real Estate Home Run to continue as Rates Low - June 15, 2021

2021 Housing Bubble Returns on Ultra low - 3 years of 10%+ Price Gains

• Price of lumber is critical to home building A big factor is the price of lumber.

DURABLE sector - Home builders

KEYS: The housing sector benefits from tailwinds of

• Low mortgage rates
• Strong employment and wage growth
• A continuing home building expansion
• Rising home prices that support housing starts
• Building permits, a leading indicator for housing starts, hit their highest level in over a decade in October.
• Millennials are starting to buy houses more often. About 38% of them owned homes in the third quarter, up from 36% in the prior quarter. “That is still a far cry from the 65% ownership overall, but that just means there is a long way to go,”.

KBH

LEN

TMHC

TOL

CCS R5

Century Communities - An entry level home builder that is in the very early stages of growth and is in the best market – entry level. The prices are lower for first time home buyers. They’re in the best areas and sell their homes in 17 states across the West, Mountain, Texas and Southeast U.S. regions. Between now and 2024, we’re going to need these homes as Millennials, which is the biggest group ever, will start to buy homes. We think the next 5 years will be a great opportunity to own housing.