America's Largest Homebuilder Forecasts a Strong Housing Market Over the Next 5 Years

So far, the story of the past few months for pretty much every builder has been a massive jump in demand driven by the COVID-19 crisis. We have recently heard from industry heavyweights Lennar and PulteGroup. America's biggest homebuilder, D.R. Horton (NYSE: DHI), recently reported and the common thread is a massive uptick in demand and orders. Interestingly the data points were supported by recent economic data out of the U.S. government. This means that D.R. Horton should see a continuation of its recent growth for the forseeable future.

The United States Census Bureau just reported that the homeownership rate in the second quarter of 2020 increased to 67.9%, compared to 64.1% in the first quarter of 2020. This represents a sea change in the attitude of homebuyers. It is certainly possible that complications from COVID-19 may have created measurement errors that will be revised away later. After all, a 3.8 percentage point jump is way out of line with historical quarterly changes. The trend of increasing homeownership rates is unmistakable, though. Demand is accelerating for single-family homes and we already have a massive inventory shortage.