THE COWEN INSIGHT
Cowen analyzes the home improvement industry’s long term outlook, including five secular trends. Factors we consider are: housing indicators, DIY vs pro, etc.
LONG-TERM OUTLOOK FOR THE HOME IMPROVEMENT SECTOR
We analyze the home improvement sector’s long-term outlook and performance relative to GDP.
This is driven by five secular trends:
(1) An aging housing stock
(2) Rising millennial homeownership
(3) New home shortage
(4) Older generations are more likely to age in place than their predecessors
(5) Benefits from a hybrid workforce
WHAT TO WATCH
A key factor to monitor is the Fed’s interest rate policy and the subsequent impact on mortgage rates. This is coupled with other housing and economic indicators. Our correlation analysis concludes that the 30-year fixed mortgage rates, S&P/Case-Shiller U.S. National Home Price Index, and Real Private Residential Fixed Investment have the strongest predictive ability.
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