Group 1: Current State of the US Real Estate Market - The US real estate market is primarily driven by existing home sales, with new home sales accounting for less than 20% of total transactions. Since 2023, home sales have been sluggish due to high interest rates, with existing home sales dropping to levels not seen since the 2009 financial crisis, and new home sales returning to pre-pandemic levels [2][8] - Existing home inventory is low, while new home inventory faces significant liquidation pressure. The "rate lock effect" has suppressed market liquidity, leading to low demand and high prices in the existing home market, while the new home market is characterized by low sales and high inventory, resulting in extended liquidation periods [2][7] - Housing investment's contribution to GDP has decreased to around 4%, while housing services consumption accounts for 12% of GDP, indicating its critical role in driving economic activity [2][15] Group 2: Housing Prices and Affordability - Post-pandemic, US housing prices have increased significantly, outpacing household income and rent growth by 19 percentage points and 17 percentage points, respectively, leading to higher mortgage costs and increased rental attractiveness [3][19] - The proportion of household income spent on housing has risen from approximately 15% to around 25%, significantly constraining consumer spending power [3][21] - The average mortgage repayment period has extended from 65 months to about 77 months since 2021, reflecting decreased affordability for homebuyers [3][22] Group 3: Mortgage Rates and Influencing Factors - High mortgage rates are primarily driven by elevated 10-year Treasury yields and MBS spreads that cannot decline further. Despite the Federal Reserve's rate cuts, the 30-year mortgage rate remains high at 6.01% due to persistent high Treasury yields and low refinancing activity [4][47] - The MBS yield is closely tied to the 10-year Treasury yield, with a correlation of 98%. Factors affecting MBS spreads include credit risk premiums and the Federal Reserve's MBS purchasing activities [4][32] Group 4: Impact of Trump's New Policies - The housing purchase power index has dropped to a historical low due to rising home prices and mortgage rates, which have significantly increased housing costs relative to income [5][50] - Trump's administration aims to implement targeted real estate policies to improve housing affordability and gain support from middle and low-income groups ahead of the midterm elections. However, the effectiveness of these policies remains uncertain [5][58] - Key proposals include allowing transferable mortgages, limiting large institutional purchases of homes, and purchasing $200 billion in MBS to lower mortgage rates. However, only the MBS purchase plan has been officially implemented, while other proposals face feasibility challenges [5][54][58]

Investment Rating - The report maintains an "Overweight" rating for the real estate development and real estate services sectors [6]. Core Insights - The U.S. housing market in H1 2025 is under significant pressure from high prices and interest rates, leading to historically low housing affordability and a decline in both new and existing home sales [1][11]. - Existing home prices have reached record highs, with the median price in June 2025 at $433,000, marking a 1.4% year-on-year increase [20]. - The overall inventory of homes has increased slightly, but existing home inventory remains tight, indicating ongoing supply-demand imbalances [3][48]. Summary by Sections Transactions & Prices - In the first half of 2025, new home sales totaled 330,000 units, down 3.7% year-on-year, while existing home sales were 2.04 million units, a slight decrease of 0.2% [2][11]. - The median price for new homes averaged $417,000, a decrease of 1.2% compared to the same period in 2024, while existing homes saw a median price increase of 2.4% to $411,000 [2][20]. Supply - As of June 2025, new home inventory stood at 502,000 units, a 2.7% increase from December 2024, while existing home inventory rose to 1.54 million units, a 35.1% increase [3][48]. - The months of supply for existing homes is 4.7 months, indicating a continued shortage despite the marginal increase in inventory [48]. Interest Rates - The Federal Reserve has maintained the federal funds target rate between 4.25% and 4.50% since early 2025, with 30-year fixed mortgage rates fluctuating between 6.65% and 6.96% [4][53]. - As of August 2025, the average 30-year fixed mortgage rate slightly decreased to 6.59%, still within the 80.4% percentile historically [4][53]. H2 2025 Outlook - The report anticipates that high construction material costs and increased inventory pressures will lead to a conservative approach from builders, resulting in a continued decline in new home starts [60]. - The "rate lock effect" is expected to persist, limiting existing homeowners' willingness to sell, thereby exacerbating the existing home inventory shortage [1][60].

Investment Rating - The report indicates a cautious outlook for the U.S. residential market in 2025, suggesting potential price softening for existing homes and a stable increase in new home market share [1]. Core Insights - The "rate lock effect" continues to be a core issue affecting the supply and sales of existing homes, with a need to monitor the impact of interest rate cuts on the market [1]. - Existing home transactions may gradually shift from a seller's market to a buyer's market, potentially leading to price adjustments and marginal improvements in housing affordability [1]. - Developers are expected to increase the supply of lower-priced housing to enhance affordability, with new home sales and market share projected to grow steadily in 2025 [1]. Sales & Prices - In 2024, U.S. home sales slightly declined under the dual pressures of high prices and high interest rates, with total transactions at 4.746 million units, down 0.4% year-on-year [3]. - New home sales remained relatively stable at 682,000 units, up 2.4% year-on-year, while existing home sales fell to 4.064 million units, marking a historical low [8]. - The median price for new homes was $420,000, a 1.2% decrease from 2023, while existing home prices reached a median of $401,000, up 4.5% year-on-year [15]. Supply & Interest Rates - By the end of 2024, total housing inventory in the U.S. increased by 14.3% year-on-year, with existing home inventory remaining tight at 1.15 million units, up 16.2% year-on-year [21]. - Despite the Federal Reserve's interest rate cuts, the 30-year fixed mortgage rate remained high at 6.96% as of January 2025, indicating ongoing pressure on potential homebuyers [27][28]. Challenges in the Market - The U.S. housing market faces significant challenges, including a supply gap of 3.7 million units and a high percentage of homeowners unwilling to sell due to low existing mortgage rates [5][33]. - The affordability crisis is exacerbated by high home prices and interest rates, with the housing purchase index nearing historical lows [20]. 2025 Outlook - The report anticipates that existing home prices may soften, transitioning the market dynamics towards a buyer's market, influenced by the lengthening transaction periods and increasing new listings [37][40]. - The share of new homes is expected to increase as builders focus on smaller, more affordable units, with a projected 13.8% growth in single-family home starts in 2025 [42].