Mortgage rates rose this week for the first time since mid-July, mortgage buyer Freddie Mac said Thursday. Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage rose to 6.3% from last week's reading of 6.26%. The average rate on a 30-year loan was 6.08% a year ago. TREASURY'S BESSENT SAYS FIXING HOUSING AFFORDABILITY CRISIS WILL BE ONE OF HIS 'BIG PROJECTS' THIS FALL "Housing market activity continues to hold up with purchase ...

A type of mortgage that fell out of favor in the aftermath of the financial crisis is catching on again. Adjustable-rate mortgage demand has surged this year, making up 12.9% of all originations last week, a postcrisis high. The loans allow borrowers to lock in a lower rate than they could get on a 30-year fixed-rate mortgage for five, seven, or 10 years before the rate readjusts to market levels. They're catching on as conventional mortgage rates remain stubbornly high. Read more: When will mortgage r ...

Core Viewpoint - The current state of the housing and job markets indicates that the central bank should have implemented more significant interest rate cuts to address economic concerns [1] Group 1: Housing Market - The housing market is showing signs of distress, which may necessitate a more aggressive monetary policy response [1] - Declining home sales and rising mortgage rates are contributing to a slowdown in the housing sector [1] Group 2: Job Market - The job market is also exhibiting weakness, with increasing unemployment claims suggesting potential economic instability [1] - A lack of job growth could further exacerbate challenges in consumer spending and overall economic health [1] Group 3: Central Bank Policy - The central bank's current interest rate strategy may not be sufficient to stimulate the economy given the troubling indicators from both the housing and job markets [1] - There is a growing consensus that more proactive measures are needed to support economic recovery [1]

Group 1 - The main question regarding the Fed's rate decision is whether financial conditions are currently restrictive, particularly for smaller banks, and the implications of a 25 basis point cut compared to a 75 basis point cut [2][3] - A 25 basis point decrease in rates is expected to benefit all banks, especially regional banks, and improve conditions for clients [3][6] - There is skepticism about the timing of a rate cut given that stocks and real estate values are at all-time highs, inflation remains above the Fed's target, and unemployment is low [4][5] Group 2 - Loan demand is anticipated to increase regardless of the Fed's decision, but a 25 basis point cut could further stimulate economic demand by making it easier for borrowers to meet debt service coverage ratios [6] - Concerns about commercial real estate have not materialized as expected, and recent rate decreases have allowed borrowers to secure better rates than nine months ago [6][7] - The housing market is experiencing stagnation, with poor housing start numbers indicating a need for lower mortgage rates to stimulate activity [8][9] Group 3 - Current mortgage rates have decreased to approximately 6.4%, down from around 7% a few months ago, but there is a need to further reduce spreads between mortgage rates and the 10-year yield [11] - The housing cost issue is primarily supply-driven, and increasing housing supply could lead to lower housing costs [11][12] - The increase in mortgage rates has not led to a decrease in residential real estate values, which is contrary to typical market behavior [12]

Market Overview - Major stock indices are experiencing a pullback from record highs, with the Dow down approximately 80 points, while the S&P 500 and Nasdaq are roughly flat [1][2][3] - The Russell 2000 small-cap index is down about 0.25%, indicating more negativity compared to larger indices [4] - The 10-year Treasury yield is down to 4.03%, approaching the psychological level of 4.0% [4][5] Federal Reserve Insights - The Senate confirmed Steven Myron as a Federal Reserve governor, with expectations of a 25 basis point rate cut during the upcoming FOMC meeting [9][10] - Myron's dovish stance raises questions about his support for the rate cut, as he may prefer a larger reduction [10][11] - The Fed's dual mandate is under tension, with a softening job market and broadening inflation, complicating the decision-making process [17][23] Consumer Behavior and Retail Sales - Retail sales data shows strength, with August figures beating expectations, indicating consumer resilience despite economic uncertainties [15][20] - Best Buy's CEO noted steady consumer demand, particularly in electronics, with low single-digit positive comps expected for the quarter [108][111] - The housing market's performance is linked to consumer spending on big-ticket items, with a sub-6% mortgage rate seen as a potential catalyst for recovery [116][117] Sector Performance - The energy sector leads with a gain of 1.75%, while utilities and real estate are underperforming [5][6] - Tesla has been a standout performer, up 2%, contributing to the consumer discretionary sector's strength [6][7] - Chinese tech stocks are showing positive momentum, with Alibaba and JD.com up 2% and 3% respectively, indicating a divergence from U.S. market trends [7][84] Company-Specific Developments - Hershey Foods received a double upgrade from Goldman Sachs, reflecting strong pricing power and a positive outlook ahead of the holiday season [68][70] - Ralph Lauren's long-term financial outlook disappointed some investors, but the stock remains up 35% year-to-date, with a focus on inclusive luxury [63][66] - CLA, a new fintech stock, received mixed reviews from analysts, with a buy rating from Compass Point Research and holds from others, indicating cautious optimism [58][60]

Economic Outlook - The Federal Reserve is expected to cut interest rates, with a consensus leaning towards a 25 basis points reduction, although a 50 basis points cut would be more beneficial for the economy [2][4] - The job market is showing signs of weakness, and there is a significant lack of discussion regarding the housing market, which is affecting young families' ability to afford homes [3][4] Housing Market - The current real estate market is characterized by high demand and low supply, leading to unprecedented affordability issues for young families [4] - Despite high mortgage rates, home prices have not decreased as typically expected, exacerbating the affordability crisis [4] Tariffs and Inflation - The justification for maintaining high interest rates due to tariffs is questioned, as tariffs are viewed as a one-time price increase rather than a continuous inflationary factor [5][6] - The economic environment is complex, with uncertainty surrounding tariff strategies impacting small businesses and hiring [7][8] Employment and Investment - There is optimism regarding a resurgence in hiring by the end of the year, although the current market conditions are weak [9] - Foreign investment and reshoring of manufacturing to the U.S. are anticipated to positively influence the economy [8][9]

Group 1 - The Federal Reserve is expected to make a decision on interest rates this week, with President Trump advocating for a significant cut, although market expectations do not align with this [1][2] - Recent economic indicators, such as the Empire Manufacturing report showing a significant loss, suggest a slowing economy, which may provide the Fed with justification for a rate cut [2][4] - Inflation remains a concern, with current rates at 2.9% for headline and 3.1% for core CPI, both significantly above the Fed's 2% target [4][6] Group 2 - The housing market is a focal point for the potential impact of rate cuts, with President Trump suggesting that a cut could alleviate housing issues, although the correlation is uncertain [5][6] - The long end of the yield curve, which influences mortgage rates, may not respond as expected if inflation continues to rise, potentially limiting the effectiveness of rate cuts on housing affordability [6][7] - If mortgage rates decrease due to lower long-term rates, it could lead to increased demand in the housing market, subsequently driving up house prices [7][8]

Core Viewpoint - RH has shown progress in profitability despite facing macroeconomic challenges and tariff uncertainties, but the company's outlook has become more cautious, leading to a decline in share prices after the earnings report [1][11]. Financial Performance - For the second quarter, RH reported revenue of approximately $899 million, representing an 8.4% year-over-year increase, while net income surged by 79% to around $52 million [4]. - Free cash flow for the quarter was about $81 million, indicating strong cash generation [4]. - Adjusted operating margin improved to 15.1%, and adjusted EBITDA margin reached 20.6%, both up 340 basis points from the previous year, showcasing significant margin expansion alongside revenue growth [5]. Strategic Initiatives - The company is investing in a global brand strategy, including new flagship locations in Europe, while navigating tariff-related uncertainties and a sluggish U.S. housing market [2][10]. - RH is shifting its sourcing strategy, expecting receipts from China to decrease to about 2% by Q4, down from 16% in Q1, and increasing production in the U.S. and Italy [9]. Guidance and Outlook - RH revised its fiscal 2025 revenue growth forecast to 9% to 11%, down from a previous estimate of 10% to 13%, and adjusted its operating margin expectations to between 13% and 14% [7]. - The company anticipates about $30 million in incremental tariff costs in the second half and expects a delay in the fall interiors sourcebook, pushing an estimated $40 million of revenue from Q3 to Q4 and early fiscal 2026 [8]. Market Conditions - The housing market remains a significant concern, with the CEO expressing disappointment in its performance despite demand growth [10]. - International expansion efforts, such as the opening of RH Paris, are seen as a counterbalance to domestic challenges, with plans for additional locations in London and Milan by 2026 [10]. Valuation Considerations - Despite improved profitability metrics, RH's valuation remains challenging, trading near a mid-50s price-to-earnings multiple and a market capitalization exceeding $4 billion, which may deter new investors given the uncertainties [11].

Group 1 - RH reported weaker-than-expected second-quarter results with earnings of $2.93 per share, below the analyst estimate of $3.20, and revenue of $899.15 million, missing the Street estimate of $904.64 million [1] - Despite challenges, RH experienced industry-leading growth with a revenue increase of 8.4% and demand growth of 13.7% in the second quarter [2] - RH lowered its fiscal 2025 revenue outlook from a range of $3.49 billion to $3.59 billion to a new range of $3.46 billion to $3.53 billion, compared to the previous estimate of $3.52 billion [2] Group 2 - Following the earnings announcement, analysts adjusted their price targets for RH, with Telsey Advisory Group downgrading from Outperform to Market Perform and lowering the price target from $255 to $220 [8] - Barclays maintained an Overweight rating but reduced the price target from $436 to $385 [8] - Guggenheim reiterated a Buy rating and maintained a price target of $300 [8]

yield uh fell below 4% for the first time in five months. This comes less than a week before the next Fed decision. Joining us now from the Zelman Housing Conference in Boston is CNBC real estate senior real estate reporter Diana Ol.Uh Diana, great to see you. What do you what do you make of this drop and and what could 25 or 50 basis points and cuts next week do to the mortgage rate. >> Well, Melissa, despite the two economic indicators we saw this morning, we only saw mortgage rates drop two basis points. ...