A Year of Rejuvenation for Housing Industry
Our research team at Hoya Capital is pleased to provide you with our insights into recent trends in the US Housing Industry.
The year of rejuvenation continues for the domestic-focused US real estate sector following one of the toughest years for REITs and Homebuilders since the financial crisis. For the US housing industry, the story of this year continues to center around the resilient demographic-led growth in household formations along with the sharp pullback of the 30-year fixed mortgage rate, which has stimulated renewed activity across nearly all segments of the housing industry. Perhaps best illustrating this rejuvenation, residential fixed investment offered a positive contribution to GDP growth in the third quarter of 2019 for the first time since the fourth quarter of 2017. 1  

New Home Sales recorded its strongest two months in more than twelve years in September and October as sales were higher by 31.6% compared to a year ago in October on a seasonally-adjusted annualized basis. 2  Forward-looking economic indicators suggest that the momentum may well continue into 2020. Building Permits reached new 12-Year Highs in October while Housing Starts are higher by 8.5% compared with a year ago in October on a seasonally-adjusted annualized basis. 3 The Mortgage Bankers Association Builder Application Survey data for October, meanwhile, showed mortgage applications for new home purchases increased 31.5% compared to a year ago. 4
Despite a solid end to the decade for new home construction, the 2010s will likely be remembered as a decade of significant under-building of housing. Household formations outpaced new housing starts by more than 100,000 in 2018, pushing the vacancy rate for both owner-occupied and renter-occupied homes to near-multi-decade lows. 5 The effects of this housing shortage, the data suggests, has been a rise in housing costs through higher rents and a growing share of spending allocated towards housing and housing-related services. Housing is now the single largest annual expenditure for the average American household, accounting for nearly a third of average annual spending. 6

Millennials - the largest generation in American history - are coming full-steam into the housing markets over the next decade amid this period of historically low housing supply. 7 Harvard University's Joint Center for Housing Studies (JCHS) projects that annual household growth from 2018-2028 will average 1.2 million households per year, which is 20% higher than the prior 5-year average. 8 This combination of historically low housing supply and strong demographic-driven demand has resulted in a compelling macroeconomic backdrop for companies involved across the US Housing Industry over the next decade, especially companies involved in new home construction, home improvement and repair, residential rental operators, and real estate data and technology.
Introducing HOMZ - Hoya Capital Housing ETF
Our team at Hoya Capital is honored to highlight that the Hoya Capital Housing ETF - HOMZ - was awarded the “ Most Successful & Innovative ETF Launch ” at the 2019 ETF Express USA Awards!
There's more to real estate than REITs. And there's more to Housing than Homebuilders. HOMZ (pronounced Homes ) offers exposure across the entire US Housing Industry, tracking the Hoya Capital Housing 100 Index , a rules-based index designed to be the new benchmark for the US Housing Industry.

We believe that HOMZ captures the compelling thematic growth trends of the US Housing Industry over the next decade including the recovery in new home construction, the realization of deferred home improvement spending, and the effects of the mounting housing shortage, which has resulted in rising rents and a growing share of spending towards housing.
HOMZ breaks through the traditional classification lines in the real estate and homebuilding categories, investing in all segments of the residential real estate industry while avoiding the potentially at-risk real estate sectors like malls and shopping centers. W e believe that HOMZ provides a modernized evolution in the real estate and homebuilding categories.

The index is divided into four US Housing Industry Business Segments, each weighted based on their relative contribution to US Gross Domestic Product. In addition to offering exposure to companies involved in home building, home improvement, and home rental operations, HOMZ also offers representative exposure to transformative sectors like real estate services and technology that are bringing long-needed innovation and efficiency to the real estate transaction process.
 HOMZ was created to address a core investment need. The US Housing Market is one of the largest - and arguably the most important - asset class in the world. Housing is the single largest annual expenditure for the average American household, accounting for nearly a third of average annual spending according to the US Bureau of Labor Statistics. 9

Considering the importance of housing costs within a typical American's spending allocation, we believe that many investors lack adequate exposure to residential real estate. As of November 2019, real estate comprised just 3.1% of the S&P 500. 10 We believe that investors and financial advisors will potentially find HOMZ to be a compelling solution for their clients who are impacted by the macroeconomic trends affecting the US Housing Sector including rising rents and housing costs, yet may lack the adequate exposure within their current asset allocation.
HOMZ has received nice coverage from the press and analysts including being discussed in MarketWatch , Forbes , Financial Advisor Magazine , and being mentioned in ETF.com's recent article titled, " Most Interesting ETF Launches This Year ." Additionally, we were recently featured on Bloomberg's ETF IQ to discuss the compelling long-term trends in the US housing industry.
Please feel free to reach out with any questions.

Alex Pettee, CFA
President, Director or Research
(833) HOYA-CAP (Ext. 1)
About Hoya Capital Real Estate
Hoya Capital Real Estate is a research-focused Registered Investment Advisor based in Rowayton, Connecticut. Hoya Capital Real Estate was founded with the mission of making real estate more accessible to all investors. Hoya Capital is among the most widely-read and cited publishers of real estate commentary and research. In addition to advising HOMZ, w e offer a full range of investment and portfolio management services including our real estate model portfolio   strategy, and our fully Customized Real Estate Portfolio strategy. For more information please visit  www.HoyaCapital.com or email Invest@HoyaCapital.com .
Investing involves risks. Principal loss is possible. The Fund is not actively managed. The Fund’s investments will be concentrated in housing and real estate-related industries. Investments in real estate companies and the construction and housing industry involve unique risks. Real estate companies, including REITs, may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. Many factors may affect real estate values, including the availability of mortgages and changes in interest rates. Real estate companies are also subject to heavy cash flow dependency, defaults by borrowers, and self-liquidation. The construction and housing industry can be significantly affected by the real estate markets. Compared to large cap companies, small and mid-capitalizations companies may be less stable and their securities may be more volatile and less liquid. As with all ETFs, Shares may be bought and sold in the secondary market at market prices and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Although it is expected that the market price of Shares will approximate the Fund’s NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. 

1) US Bureau of Economic Analysis. Gross Domestic Product, 3rd Quarter 2019. (Release Date: October 30, 2019) Real Gross Domestic Product (Real GDP) is the total value of goods produced and services provided in a country during one year, adjusted for inflation.
2) US Census Bureau. Monthly New Residential Sales, October 2019 (Release Date: November 26, 2019) New Home Sales is an economic indicator which records sales of newly constructed residences in the United States of America.
3) US Census Bureau. Monthly New Residential Construction, October 2019. (Release Date: November 19, 2019) Housing starts is an economic indicator that reflects the number of privately owned new housing units on which construction has been started in a given period. Building permits represent the number of new privately-owned housing units authorized by building permits in the United States.
4) Mortgage Bankers Association. Builder's Application Survey, October 2019. (Release Date: November 19, 2019). The Builder Application Survey provides timely and detailed monthly metrics on loan application activity received directly from home builders for new single-family properties. This data provides a gauge of new home sales activity in the United States.
5) US Census Bureau. Quarterly Residential Vacancies And Homeownership, Third Quarter 2019. (Release Date: October 29, 2019). The Housing Vacancies and Homeownership Survey provides current information on the rental and homeowner vacancy rates, and characteristics of units available for occupancy.
6) Bureau of Labor Statistics. Consumer Expenditure Survey, 2018. (Release Date: September 10, 2019). Spending on housing is measured as a percent of average annual expenditures of all consumer units.
7) US Census Bureau. "Millennials Outnumber Baby Boomers and Are Far More Diverse, Census Bureau Reports." (Release Date: June 25, 2015)
8) The State of the Nation's Housing." Joint Center for Housing Studies of Harvard University. 2019.
9) Bureau of Labor Statistics. Consumer Expenditure Survey, 2018. (Release Date: September 10, 2019). Spending on housing is measured as a percent of average annual expenditures of all consumer units.
10) S&P Dow Jones Indices. S&P 500 Index Fact Sheet. November 2019. The S&P 500 is a stock market index that tracks the stocks of 500 large-cap U.S. companies. It represents the stock market's performance by reporting the risks and returns of the biggest companies.

The Hoya Capital Housing ETF seeks to track the performance, before fees and expenses, of the Hoya Capital Housing 100 Index. The Index is a rules-based index designed to track the 100 companies that collectively represent the performance of the US Housing Industry, divided into four residential real estate-related business segments: 1) Home Ownership and Rental Operations; 2) Home Building and Construction; 3) Home Improvement and Furnishings; 4) Home Financing, Technology & Services. Designed to track total annual spending on housing and housing-related services at the national level, each of the four segments is weighted based on its relative contribution to GDP. 

Hoya Capital Real Estate is the advisor to HOMZ and is distributed by Quasar Distributors, LLC.