A version of this story first appeared in CNN Business’s Before the Bell newsletter. Not a subscriber?can sign up Here.
New York
CNN
—
Mortgage rates have fallen recently, but are still up dramatically from a year ago thanks to a spike in long-term Treasury yields as the Federal Reserve hiked rates.
It’s already had a negative impact on the housing market, but this week we’ll learn more about how much worse the damage has been.
A long list of housing data has been tapped. On Tuesday, the US Census Bureau will report his November housing starts and building permits, and on Friday it will release new home sales data for the month. In between are his November existing home sales numbers from the National Association of Realtors on Wednesday, and weekly data on mortgage rates and applications on Thursday.
Sales of existing homes and new homes have been steadily declining over the past few months. This is due to skyrocketing interest rates and the fact that home prices remain stubbornly high for first-time buyers. Both of those numbers are down from his year ago, although housing starts and building permits are up significantly month over month.
Still, there are some encouraging signs that the worst may soon be over.renner stock
(Len)One of the largest homebuilders in the US has rallied after reporting earnings last week. Sales beat expectations, and the company’s guidance on the number of homes it expects to deliver next year also slightly exceeded analyst estimates.
Renner investors “look ahead to 2023 and may be crossing a recession-to-potential recovery trough,” according to CFRA Research analyst Kenneth Leung.
Others in the industry are cautiously optimistic.
Data from Amherst Group, an investment firm that buys single-family homes for rent, shows it’s important to put the recent price declines in the background.
House prices are still up about 40% from pre-pandemic levels, Amherst said. So a further drop of about 15% would only reach mid-2021 levels. So this is different from his mid-2000s real estate bubble burst.
It’s also worth noting that the job market remains strong and wages are rising. Moreover, many consumers still maintain significant levels of excess savings thanks to government stimulus during the pandemic.
All of these are some good reasons why the housing market can avoid a deep and prolonged recession.
Brandywine Fixed Income said, “The U.S. housing market remains challenged by a tight labor market, the lock-in effect of low fixed mortgage rates on existing homeowners, tight mortgage underwriting, low leverage in the mortgage sector, It is supported by low housing supply,” he said. Analyst Tracy Chen said in a report earlier this month.
“I believe we can avoid a severe housing recession like the global financial crisis,” Chen added.
Others said home sales may still be weak due to rising house prices and higher mortgage rates, but the good news is that most existing homeowners are still paying their monthly mortgages on time. It is pointed out that there is
Again, this is in stark contrast to 2008, when many subprime borrowers and borrowers with poor credit histories were unable to keep up with their mortgage payments.
“Housing is not a drag on the economy. Yes, the housing market is affected. But mortgage delinquencies remain low,” said Gene Goldman, chief investment officer at Cetera Investment Management. I’m here.
Not many companies are reporting their latest earnings this week. But only a few can give more clues about the economic health of consumers and the state of business spending.
Grain giant General Mills
(GIS) Earnings will be announced on Tuesday. Analysts expect both sales and profits to increase slightly. Consumers may be more wary of inflation and the economy as a whole, but they’re still eating wheaty.General Mills stock
(GIS) It’s up nearly 30% this year.
Analysts aren’t too optimistic about the sneaker king’s prospects. Dow Component Nike
(NKE)used car dealer Carmax
(KMX) and memory chip maker Micron
(mu)The company’s semiconductors are used in devices ranging from mobile phones and computers to automobiles.
Earnings are expected to decline for these three companies. They’re not the only corporate America leaders to report weak results.
Fourth quarter earnings for the S&P 500 companies are expected to decline 2.8% year-over-year, according to data from FactSet. Analysts are also busy with downward revisions to forecasts. FactSet’s senior earnings analyst John Butters said in a report that fourth-quarter earnings are expected to rise 3.7% as of Sept. 30.
Investors will also be paying close attention to what companies say in their earnings reports about their outlook for 2023. Analysts now expect 5.3% revenue growth in 2023. This may be too optimistic. Because of broader economic concerns.
“A recession is very likely,” said Vincent Reinhart, chief economist and macro strategist at Dreyfus & Mellon. “It will have a knock-on effect on corporate earnings. Rising interest rates and weak earnings suggest a bigger hit for stocks.”
Monday: Germany Ifo Business Environment Index
Tuesday: US housing starts and building permits. China sets prime rate for loans.Bank of Japan Interest Rate Decision; Earnings from General Mills, Nike, FedEx
(FDX) and blackberry
(BB)
Wednesday: US Used Home Sales.German consumer confidence; revenue from Rite Aid
(RAD),carnival
(CCL)Synthus
(CTAS)Toro
(TTC) and microns
Thursday: US Weekly Unemployment Claims.US Q3 GDP (3rd Estimate); CarMax Earnings
(KMX) and Peishex
Friday: US Personal Income and Expenditure. His PCE inflation in the US. US New Home Sales. US durable goods orders. Consumer sentiment in Michigan, USA.Inflation in Japan; UK market closes early
