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Our Favorite Way to Invest in a Rebounding Housing Market

Canadian lumber producer Canfor should see its profitability grow alongside demand for houses in the U.S., says Morningstar’s Charles Gross.


Charles Gross: U.S. housing demand has been strong during the first quarter of 2016, with starts growing 15% year-over-year on a seasonally adjusted basis. Better yet, single family starts were up 20% in the quarter, thanks to upward revisions for January and February.

Since 2007, starts have remained depressed by historical standards. As millennials age, they become more likely to rent or own property. Vacancies are already being soaked up by new households, after which point, robust homebuilding activity will be required to meet housing demand. Although new home prices are at all-time highs, this should drive starts higher as homebuilders seek to capitalize on an attractive pricing environment.

Charles Gross does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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