Long-term demand drivers in the U.S. housing market underpin a multi-year growth outlook in residential building products, according to a new industry report released by the Building Products investment banking team from Brown Gibbons Lang & Company (BGL). The building products industry report features an in-depth examination of the state of the U.S. housing market, highlighting compelling fundamentals that provide the foundation for future growth. Key takeaways include:
- Expectations of easing inflation and lower interest rates should continue to put downward pressure on mortgage rates.
- The deficit of affordable housing will need to be filled in part by accelerating the pace of new home construction.
- Home builder and government incentives should entice many prospective buyers and sellers to return to the market.
- Consumers continue to signal a strong desire to invest in their existing homes, with $450 billion+ projected to be spent on repair and remodeling (R&R) activities in 2024.
While tempered housing demand in 2023 has slowed down related building products M&A activity, BGL believes conditions will improve in line with the strengthening housing market.
Transactions such as MITER Brands’ announcement in January 2024 of its $3.1 billion acquisition of PGT Innovations (pending) and ASSA ABLOY’s $4.3 billion purchase of the Hardware and Home Improvement Business from Spectrum Brands in June 2023 underscore strong investor conviction about the long-term prospects for both the residential new construction and R&R markets.
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