Housing State of the Union—The Four "As" of Housing in 32 Pictures

Research evidence excerpt

Housing State of the Union—The Four "As" of Housing in 32 Pictures

Equity Research

Multi Company Update — May 26, 2026

Building Products

Distributors

Homebuilders

Housing State of the Union—The Four "As" of

Housing in 32 Pictures

Our Call Sam Reid

We detour from our normal regimen of real time housing tidbits & go thematic w/ 32 Equity Analyst | Wells Fargo Securities, LLC

Sam.Reid@wellsfargo.com | 727-512-3872

(mostly) fresh exhibits across four housing themes: affordability, appetite, availability &

Eric Cohen, CFAage. It's tough out there; favor MAS/FERG in R&R; TOL/PHM in builders.

Associate Equity Analyst | Wells Fargo Securities, LLC

Eric.Cohen@wellsfargo.com | 212-214-8061

Big picture. Housing stocks are out of favor (XHB -13pts YTD vs. SPX); a lot of that via NT

uncertainty (Iran contagion, etc.). But some of this is structural; our analysis paints a stark

picture of the housing mkt & suggests there could be more pain (home price deflation,

regional supply imbalance) before returning to normal. Our playbook: volatility might

present tactical opportunities to play beta (DHI/BLDR), but for LT investors quality >

beta, favoring the usual suspects (MAS/FERG/PHM/TOL).

Affordability (prices vs. incomes). It's bad: monthly pmts vs. incomes sit at peak levels

via an unusual combo of high rates & sticky home prices (Ex 1). Even worse? Pmt-to-

income ratios sat at perhaps their most optimal levels in 2019; to get 2019 affordability

today, our analysis suggests home prices would need to decline -32% (or incomes +47%;

Ex 3). Stock reads: bad for entry-level builders w/ pmt-sensitive buyers (DHI/LEN) & start-

levered peers (BLDR/IBP); less bad for move-up (TOL/PHM).

Appetite (demand). It's low; only ~20% of consumers say it's a good time to buy (-50pt vs

'21; Ex 12).