BRI: U.S. Insights – JefData: Housing Storm Largely Past and the Roof Didn’t Collapse

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U.S. Insights – JefData: Housing Storm Largely Past and the Roof Didn’t Collapse

— Jefferies U.S. Equity Research

Jefferies published a collaborative report on the U.S. housing market exploring a new Zillow dataset. Analysis of housing transactions posted to Zillow suggests that the biggest Y/Y price declines have passed and the price weakness of late is mostly limited to the most expensive homes. The U.S. is now lapping the change in SALT deductions, interest rates are well off highs, and real wages are growing at the highest rate this cycle—all reasons to believe 4Q18 was probably the worst rate of change for home prices. In addition, the current environment may also be past the worst in order misses from key homebuilders. Equity analyst Phil Ng prefers stocks with exposure to R&R (MAS, FBHS), public infrastructure and stocks that were oversold (OC, SUM). Equity analyst Jonathan Matuszewski noted strong correlation between comps at HD, LOW and FND and Y/Y home price changes. FULL REPORT