Stocks have moved sharply lower over the course of the trading day on Thursday, with the major averages all showing significant moves to the downside after once again failing to sustain an initial move to the upside. Currently, the major averages are just off their lows of the session. The Dow is down 496.77 points or 1.0 percent at 49,624.63, the Nasdaq is down 341.43 points or 1.5 percent at 22,725.04 and the S&P 500 is down 68.04 points or 1.0 percent at 6,873.43.The sell-off on Wall Street partly refle ...

Core Insights - Sales of previously owned homes in December reached a seasonally-adjusted annualized rate of 4.35 million units, marking a 5.1% increase from November and exceeding analysts' expectations of a 2% gain [1] - For the full year, existing home sales totaled 4.06 million, remaining unchanged from 2024 [1] Group 1: Sales Performance - December sales represented the strongest performance in nearly three years, with increases observed across all regions month-over-month [2] - Year-over-year sales were higher in the Northeast and Midwest, while the South and West experienced declines [2] Group 2: Mortgage Rates and Market Conditions - The average rate on a 30-year fixed loan during October and November was between 6.2% and 6.3%, lower than the rates seen in the previous spring and summer, which were closer to 7% [3] - The fourth quarter of 2025 showed signs of improvement for homebuyers, attributed to lower mortgage rates and slower home price growth, despite the overall tough year marked by record-high home prices and historically low sales [4]

Consumer Sentiment - Consumer sentiment has drifted lower since October 2024, stabilizing slightly above the 50 level, with core sentiment estimates at 53.5% but coming in at 52.9%, lower than the previous 53.3% [2][3] - Expectations for consumer sentiment were around 55, but the actual print was 54.6%, indicating a slight decline in both sentiment and future expectations [3] Existing Home Sales - Existing home sales were over 6.5 million units in 2021 but have since stabilized slightly above 4 million, with the current month’s sales at 4.13 million, slightly below the estimate of 4.15 million [5] - Month-over-month readings showed a 0.5% increase, which is lower than the previous 1.5% [6] - Long-term trends indicate that current levels of existing home sales are among the lowest seen in the past 40-45 years, reflecting ongoing weakness in residential investment [7] Geopolitical Developments - The EU has approved a loan package of approximately €90 billion (about $105 billion) to Ukraine, which is not utilizing frozen Russian assets due to ongoing legal disputes [8][10] - This funding aims to address Ukraine's financial needs without escalating tensions with Russia, highlighting the importance of maintaining diplomatic negotiations [9][10] Central Bank Actions - The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 0.75%, the highest since 1995, but the yen weakened, attributed to less hawkish commentary from the BOJ [11][12] - The interest rate differential between Japan and the United States remains significant, with U.S. rates around 36-37 basis points higher, contributing to the yen's volatility [14][15] - Traders are monitoring potential interventions by Japanese authorities to support the yen, especially as trading volumes may thin due to upcoming holidays [17]

Core Insights - Existing-home sales in the U.S. increased to a seasonally adjusted annual rate of 4.1 million in October, marking a 1.7% year-over-year gain and the best month for home resales since February [2][8] - Favorable borrowing costs, with average mortgage rates at 6.25% in October compared to 6.43% in October 2024, motivated homebuyers [3][8] - The government shutdown did not significantly hinder home sales, although it impacted some government-backed mortgage loans [4][8] Market Dynamics - The national home supply stood at 4.4 months in October, slightly above last year's levels, contributing to a more favorable environment for buyers [3][8] - Despite the increase in sales, existing-home sales remain near their lowest levels in over a decade due to high costs and persistent interest rates [6][9] - The median house price in October was $415,200, reflecting a 2.1% increase from October 2024, marking the 28th consecutive month of year-over-year price increases [10]

Housing Market Trends - The housing market is undergoing a recalibration period after the pandemic boom, with a shift in the supply-demand equilibrium towards buyers [7][16] - A bifurcation exists in the housing market, with Sun Belt and Mountain West areas experiencing more softening compared to the Midwest and Northeast [19][20] - Existing home sales are approximately 13 million below the normal trend, indicating a significant constraint in the purchase side of the mortgage market [35] - Refinance activity is also experiencing a three-year drought, coinciding with the low purchase side, making it a tough period for the mortgage industry [42] Builder Strategies and Margins - During the pandemic, builders had significant pricing power and record profit margins, but they have since compressed margins to entice buyers [3][4][5] - Builders initially used mortgage rate buydowns as a successful lever, but are now resorting to outright price cuts in some areas like Florida and Texas [6][8] - Builder margins have seen compression year-over-year among the top 11 publicly traded home builders, although many still exceed pre-pandemic levels [10] - Some builders are choosing to protect margins by pulling back on the overall number of sales, leading to a softening in single-family housing starts [11] Factors Influencing the Market - The deceleration of migration to Sun Belt areas means local incomes must now support prices, which are detached from underlying incomes [21][22][23] - The "lock-in effect," where homeowners are hesitant to give up lower mortgage rates, is impacting both supply and demand in different regions [28][31] - Tariffs have not had a significant impact on build costs, as only 7% of residential construction materials are imported, and some key materials were excluded from tariffs [13][14][15] Open Door Analysis - Open Door overpaid for homes in boomtown markets and faces challenges in the higher interest rate environment with less housing market churn [45] - There is skepticism about the long-term viability of Open Door's core I-buying business, but opportunities exist for the company to leverage its scale and attention to move into other business avenues [45][46]

Housing Market Sales - Existing home sales in July increased by 2% month-over-month, reaching a seasonally adjusted annualized rate of 401 million units, exceeding market expectations [1] - Year-over-year sales increased by 08% compared to July of the previous year [1] Housing Market Supply and Price - The number of homes for sale at the end of July was 155 million, up 157% year-over-year [2] - The current sales pace represents a 46% month supply [2] - The median price of a home sold in July was $422400, a slight increase of 02% from July of the previous year, marking a new July high [2] Buyer Trends - First-time buyers accounted for 28% of sales, down from 30% in June, historically they make up 40% [3] - All-cash transactions reached 31%, up from 27% the year before, which is considered unusually high [3][4] Regional Sales - Sales were strongest in the Northeast month-over-month and weakest in the Midwest [3]

Market Overview - The Dow finished down -11 points (-0.027%) after reaching an intra-day high of +286 points [1] - The S&P 500 lost -12 points (-0.22%), the Nasdaq was down -59 points (-0.33%), and the Russell 2000 fell -13 points (-0.65%) [1] Existing Home Sales - February Existing Home Sales reached 4.26 million seasonally adjusted annualized units, exceeding the estimate of 3.95 million and the previous month's 4.08 million [2] - The average median price of existing homes increased by +3.8% year over year to $398.4K [2] Leading Economic Indicators - U.S. Leading Economic Indicators (LEI) for February decreased by -0.3%, down from +0.2% in the prior quarter and lower than the anticipated -0.2% [3] - The LEI is now at -1.0% over the trailing six months, an improvement from -2.1% in the previous six months [3] - New manufacturing orders declined, and consumer sentiment remains fragile, with 2025 GDP now estimated at +2.0% [3] Earnings Reports - NIKE (NKE) reported fiscal Q3 earnings per share of 54 cents, surpassing the Zacks consensus estimate of 28 cents, with revenues of $11.27 billion exceeding expectations of $11.11 billion [5] - NIKE's margins were slightly soft at +41.5%, with the Chinese market underperforming [5] - FedEx (FDX) reported fiscal Q3 earnings of $4.51 per share, below the Zacks consensus of $4.65, while revenues were $22.2 billion, exceeding expectations of $21.89 billion [7] - FedEx's full-year earnings are now expected to be between $18.00 and $18.60 per share, down from the prior estimate of $19.27 [7] - Micron (MU) posted fiscal Q2 earnings of $1.56 per share and revenues of $8.05 billion, both exceeding expectations [8] - Micron has guided for a record revenue quarter in Q3, projecting $8.8 billion, with full-year revenues expected to reach $37.9 billion [8]