What This Means For The Economy The delayed release of the PCE inflation data from November means it will be less influential than usual on Federal Reserve interest rate policy. Inflation has run higher than the Fed's goal since 2021, and while it has fallen sharply from its recent peak in 2022, it has resisted the Fed's attempts to wrestle it all the way down to 2%. Some Fed officials have worried that tariffs are pushing inflation higher as merchants pass along the costs of President Donald Trump's import ...

Core Insights - The performance of top U.S. home brands like RH, Williams Sonoma, and Arhaus has remained strong despite challenges in the housing market, with RH reporting a 9% revenue increase to $884 million in Q3 [2] - A report by TD Cowen suggests that the U.S. housing market will continue to face challenges, with expectations of slower home sales persisting into 2026 [3][4] - Affordability issues are becoming more pronounced, with home prices significantly outpacing median household incomes in states like California and New York [6] Company Performance - RH's CEO expressed optimism about future performance in a stronger housing market during the Q3 conference call [1] - Williams Sonoma achieved record revenues of $1.88 billion in Q3, while Arhaus saw an 8% sales increase to $345 million [2] - RH's revenue growth of 9% to $884 million exceeded expectations [2] Market Outlook - TD Cowen's report indicates that U.S. mortgage rates are expected to decrease to 5.5%, which may facilitate more transactions but not significantly boost market activity [4] - The report also highlights that the supply of existing homes is likely to outpace demand, hindering new housing starts in 2026 [5] Affordability Challenges - The average home price in California is $754,304, while the median household income is projected to be around $96,334 to $100,600 for 2024 [6] - In New York, the median home price is $502,060, with a median household income of $85,820 for 2024 [6] - The political landscape is shifting towards addressing affordable housing, as seen in campaigns like Zohran Mamdani's in New York City, where the median home price is $793,963 [7]

Core Insights - Home prices are showing signs of weakening, with a year-over-year increase of 1.3% in September, down from 1.4% in August [1] - A significant number of sellers are delisting their homes, with close to 85,000 homes taken off the market in September, marking a 28% increase from the previous year and the highest level for that month in eight years [2] Market Dynamics - The frequency of delistings is tightening inventory, as many homeowners prefer to withdraw their listings rather than accept low offers, which keeps sale prices elevated [3] - The typical price cut for homes is around $10,000, with cumulative price cuts reaching $25,000 in October, indicating that multiple reductions are becoming more common [3] Seasonal Trends - The housing market is entering its slowest season, with many sellers likely to wait until the spring season to relist their homes [4] - Approximately 1 in 5 homes that are delisted may be relisted, but this may not occur for several months [4] Seller Challenges - Despite home prices being 50% higher than five years ago, about 15% of delisted homes in September were at risk of selling at a loss, the highest share in five years [5] - The supply of homes for sale is currently about 15% higher than a year ago, but is expected to decrease due to seasonal factors and weakening consumer sentiment [6] Sales Activity - Pending sales in October saw a month-to-month increase of 1.9%, remaining flat compared to the previous year, potentially influenced by a slight drop in mortgage rates [7]

Core Viewpoint - Home Depot, Inc. has lowered its full-year profit forecast due to weaker demand, cautious consumer behavior, and a stalled housing market [1][4] Demand and Market Conditions - Despite stable underlying demand, an expected increase in demand for the third quarter did not occur, leading to disappointing results [2][3] - External economic conditions, particularly consumer uncertainty and pressure in the housing market, are negatively impacting home improvement demand [4][6] Housing Market Dynamics - The housing market is experiencing historically low turnover rates, currently at 2.9%, which limits new homeowners from undertaking large-scale projects [5] - The company is observing softer engagement in larger discretionary projects, where financing is typically utilized [5][6] Consumer Behavior - Consumers are hesitant to spend on major discretionary projects due to ongoing inflation and economic uncertainty, including concerns about job security [6][7] - The term "affordability" is frequently mentioned, indicating a significant concern among consumers regarding living costs [6] Company Performance and Outlook - Despite the challenges, Home Depot is executing well and believes it is gaining market share [7] - The company does not anticipate a near-term improvement in the macroeconomic environment or an increase in underlying demand [7][8]

Group 1 - The government shutdown is expected to impact GDP negatively, with potential job cuts being discussed in a meeting involving Trump [1] - Home sales are not expected to stop entirely during the shutdown, but the housing market will face challenges, especially if the shutdown is prolonged [1][2] - The shutdown introduces delays and uncertainty, particularly affecting first-time buyers and those with limited financial flexibility [2] Group 2 - The home buying process may take longer than usual due to potential processing delays for FHA, VA, or USDA loans, which represent about 25% of all mortgage applications [2]

Core Insights - The U.S. housing market is experiencing a significant increase in home purchase agreement cancellations, with 15.3% of agreements falling through in July, equating to approximately 58,000 agreements, marking the highest cancellation rate for July on record [1][2] - High homebuying costs, economic uncertainty, rising inflation, and a slowing labor market are contributing factors to buyers' hesitance in the current market [1][2] Market Conditions - The housing market is slowing down as summer ends, with an impasse between buyers and sellers leading to some sellers withdrawing listings in hopes of better market conditions [2][3] - Mortgage rates are currently averaging about 6.5%, while home prices have surged nearly 50% compared to five years ago, according to the Case-Shiller Home Price Index [3][5] Cost Factors - Higher home prices are accompanied by increased insurance premiums and property taxes, with home insurance premiums rising 57% from 2019 to 2024, and a 14% increase occurring in 2024 alone [4][6] - Property taxes have increased by 12% between 2021 and 2023, further straining potential homebuyers [4][6] Income Requirements - An annual household income of $116,986 is now required to purchase a typical home, representing nearly a 50% increase since early 2020 when the required income was $78,236 [5]

Core Insights - The management team anticipates a significant slowdown in the housing market during the second half of 2025 [1] Company Performance - Opendoor has experienced considerable volatility in its stock price in recent weeks [1]