Housing was one of the key issues of the 2024 U.S. presidential election. Skyrocketing home prices and rents are having a serious impact on middle- and lower-income families, and more and more people are being evicted because they cannot afford rent. As a result, each candidate has made housing a major policy issue. In particular, Democratic candidate Harris has pledged to provide downpayment assistance for homeownership and to create 3 million new housing units during her four-year term. The U.S. housing market is susceptible to economic fluctuations and policy changes, and in relation to the stock market, the stock prices of U.S. homebuilders have been particularly sensitive to movements in U.S. mortgage rates this year.
Since it is difficult to predict interest rate levels and policy trends in the short term, we would like to look at trends in the U.S. housing market over a somewhat longer time horizon. First, on the demand side, the U.S. population continues to grow, in part due to increased immigration. In June 2024, the U.S. population is estimated to be about 336.5 million, about 50 million more than in 2000, and is expected to grow by slightly less than 50 million by 2050. In addition, the largest population by age group is currently in their 30s, a generation with significant housing needs. These factors will lead to demand remaining strong, but there is a risk that this demand may not materialize due to continued increases in house prices and further increases in mortgage interest rates. On the housing supply side, the ongoing stable shortage of supply is expected to continue for the foreseeable future against the backdrop of the curtailment of housing starts since the Lehman Crisis and the shortage of existing home inventory due to persistently high mortgage interest rates.
In this environment, the market share of large, well-financed homebuilders has increased. While the largest is DR Horton in the U.S., Japanese single-family homebuilders are expanding aggressively in the U.S. and gaining market share amid a lack of growth potential in the domestic Japanese housing market. Sekisui House, Daiwa House and Sumitomo Forestry will sell a total of about 30,000 units per year in the U.S. in FY 2023, already surpassing the total number of units sold in Japan. While U.S. homebuilders have lagged in efficiency, Japanese companies are aiming to expand their market share by leveraging their strengths in shortening construction time through industrialization technology, cost advantages, and abundant funds. We expect continued growth and further market share gains through mergers and acquisitions.
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