New home sales dropped 1.7% to a seasonally adjusted annualized ‌rate of ⁠745,000 ⁠units, the Commerce Department's Census Bureau said on Friday. Sales increased to a rate of 758,000 units in November from 656,000 in October. The data was delayed by last year's shutdown of the government. New home sales account for a small share of U.S. ⁠home sales and ‌tend to be volatile on a month-to-month basis. They are counted at the signing ⁠of a contract. New home sales advanced 3.8% on a year-over-year basis in De ...

Mortgage Rates - The average rate on the benchmark 30-year fixed mortgage increased to 6.09% from 6.06% last week, remaining the lowest in three years [1] - A year ago, the average rate on a 30-year loan was 6.96% [1] - The average rate on a 15-year fixed mortgage rose to 5.44% from 5.38% last week [5] Market Dynamics - The improving economy and lower mortgage rates compared to last year are attracting more homebuyers [4] - The 10-year Treasury yield was around 4.25% as of Thursday afternoon, influencing mortgage rates [4] - Recent policy decisions, including the announcement of Fannie Mae and Freddie Mac buying $200 billion in mortgage-backed securities, have contributed to rate volatility [8] Buyer Behavior - Homebuyers are encouraged to shop around for the best mortgage rates, as multiple quotes can lead to significant savings [4] - Uncertainty around the implementation of new policies may limit their immediate impact on the housing market [9]

Core Insights - Mortgage rates have reached a new low for 2025, with the average 30-year mortgage rate at 6.15% and the 15-year rate at 5.44%, providing potential homebuyers with renewed momentum as they approach 2026 [1][2]. Group 1: Mortgage Rate Trends - The average 30-year fixed-rate mortgage started the year near 7% but has now dropped to its lowest level in 2025, indicating a positive shift for homebuyers [3]. - Mortgage rates have shown a significant decline in the second half of the year, stabilizing around 6.2% since mid-September, which has encouraged more buyers and sellers to enter the market [2][4]. Group 2: Market Activity and Predictions - Housing contract activity saw an unexpected increase of over 3% in November, suggesting that lower mortgage rates are beginning to improve market conditions [3]. - Economists predict that mortgage rates will average around current levels in the coming year, with modest home price growth, potentially aiding the recovery of the housing market [4]. - If the current momentum continues into the peak buying season of 2026, stronger sales figures are anticipated compared to much of 2025 [5].

Core Insights - The U.S. housing industry is facing significant pressure due to affordability issues, impacting companies like Sterling Infrastructure, Inc. (STRL) [1][6] - STRL's Building Solutions segment experienced a 1% decline in revenues year over year, with legacy residential revenues falling by 17% [1][6] - The Federal Reserve's recent interest rate cut of 0.25 percentage points has provided limited relief, as high mortgage costs and tight supply continue to suppress demand [1] Group 1: E-Infrastructure Growth - STRL's E-Infrastructure Solutions segment, which serves critical projects like data centers, reported revenues of $417.1 million in Q3 2025, reflecting a 58% year-over-year growth [2][6] - This segment accounts for approximately 60% of STRL's total revenues, indicating strong demand and significant customer investments [2][3] - The company has a signed backlog of $2.6 billion, up 64% from the previous year, with E-Infrastructure representing the majority of this pipeline [3][6] Group 2: Market Performance and Valuation - STRL's stock has increased by 37.2% over the past six months, outperforming the Zacks Engineering - R and D Services industry's growth of 1% [4][7] - The stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 26.51, which is a premium compared to peers like AECOM, Fluor, and KBR [7][9] - Earnings estimates for STRL for 2026 have risen to $11.95 per share, indicating a 14.6% year-over-year growth [9][10]

Home Price Trends - Home prices are fractionally lower year-over-year and down 1.4% in the last 3 months [1] - National home prices haven't been negative since mid-2023 [1] - Certain markets are seeing significant price drops, such as Austin (-10%), Denver (-5%), Tampa and Houston (-4%), and Atlanta (-3%) [1] - Other markets are seeing gains, including Cleveland (+6%), Chicago and New York City (+5%), Philadelphia (+3%), and Pittsburgh and Boston (+2%) [1] Market Analysis & Forecast - Parcel Labs' base case is that prices will hover around zero with small positive or negative year-over-year changes, rather than the double-digit gains of the pandemic era [1] - Home prices are influenced by mortgage rates and the broader health of the economy [2] - Supply will also play a role in home prices [2] Data & Methodology - Home price reporting is challenging due to different measurement methods [1] - Parcel uses a high-tech method for measuring home prices, which is considered current and accurate [1] - Measuring prices compared with the same time a year ago is important due to housing seasonality [1]

Core Insights - Toll Brothers, Inc. reported mixed results for Q4 fiscal 2025, with adjusted earnings missing estimates while total revenues exceeded expectations and increased year-over-year [1][10]. Financial Performance - Adjusted earnings per share (EPS) was $4.58, missing the Zacks Consensus Estimate of $4.87 by 5.9% and down 1.1% from the previous year [4]. - Total revenues reached $3.42 billion, surpassing the consensus mark of $3.32 billion and reflecting a 2.7% increase year-over-year [4]. - Home sales revenues increased by 4.6% to $3.41 billion, with home deliveries rising by 0.3% to 3,443 units [5]. - The average selling price (ASP) of homes delivered was $991,600, up 4.4% from $950,200 a year ago [5]. Market Conditions - The company continues to face soft demand across several markets, but maintains a resilient business model with a balance of build-to-order and spec homes [2]. - Elevated mortgage rates and a weak housing market are significant headwinds impacting performance [2]. Contracts and Backlog - Net-signed contracts decreased to 2,598 units, down from 2,658 units year-over-year, with a total value of $2.5 billion, down from $2.7 billion [6]. - The backlog at the end of Q4 was 4,647 homes, a decrease of 22.5% year-over-year, with potential revenues from backlog declining 15.4% to $5.5 billion [7]. Cost Management - Adjusted home sales gross margin was 25.5%, contracting by 50 basis points [8]. - Selling, general and administrative (SG&A) expenses as a percentage of home sales revenues remained flat at 8.3% [8]. Balance Sheet and Cash Flow - Cash and cash equivalents stood at $1.26 billion, down from $1.3 billion at the end of fiscal 2024 [11]. - The debt-to-capital ratio decreased to 26% from 26.7% [11]. - The company repurchased approximately 5.4 million shares for $651.6 million during fiscal 2025 [12]. Future Guidance - For Q1 fiscal 2026, home deliveries are expected to be between 1,800-1,900 units, with an average price of $985,000-$995,000 [13]. - For fiscal 2026, home deliveries are anticipated to be in the range of 10,300-10,700 units, reflecting a decline from fiscal 2025 [15]. - The company expects an adjusted home sales gross margin of 26%, down from 27.3% in fiscal 2025 [15].

All right, here's the question the audience wants to know this morning. I'm looking at mortgage rates for the 30 years, 6.36%. Does a Fed rate cut, does it finally bring the rates lower.Because we've seen cuts and the rates have actually moved higher. >> You know, I think people are expecting this cut. This will be the third one this year and I don't think it's going to make a dramatic difference.Could it eventually help a little bit, but it's not going to be anything substantial. So, I don't think it's any ...

Market Transition - The housing market has shifted from a seller's market to a buyer's market, marking the first shift in at least a decade [3] - Sellers are hesitant to lower prices due to concerns about not being able to pay off their mortgages, a situation unseen in 10-15 years [3][11] - The market is expected to remain in limbo until around the time of the Super Bowl, as people pack it in for the holidays and wait to see what direction the housing market will take [5] Factors Influencing Market Behavior - Macroeconomic uncertainty and stock market volatility are causing people to hesitate on making 30-year commitments to new homes [5][6] - Lower interest rates, especially if they drop below 6%, would help the market [6] - Home prices need to adjust, as sales volume is down as much as 50% in some markets, but prices remain relatively stable, creating a standoff between buyers and sellers [7] Regional Cold Spots - Areas that were previously hot, like Florida and Texas, are now experiencing the most stale listings [12] - Over 70% of listings in Florida are stale [11] - The Washington DC area has seen a sharp increase in stale listings, potentially due to government uncertainty [11]

Core Viewpoint - The U.S. economy requires significant interest rate cuts to alleviate high borrowing costs and support labor market recovery [1][2][7]. Monetary Policy - Federal Reserve governor Stephen Miran advocates for large interest rate cuts to achieve a neutral monetary policy quickly, arguing that current rates are restrictive and detrimental to economic growth [2][5]. - The Federal Open Market Committee (FOMC) is divided on the necessity of further rate cuts, with discussions ongoing about the impact of a softening labor market and persistent inflation [2][3]. Interest Rate Cuts - Miran suggests a series of 50 basis point cuts, citing recent positive job data and low inflationary risks as justification for this approach [5][6]. - The Fed has already implemented two rate cuts this year, bringing the federal funds rate to a range of 3.75% to 4% [3]. Labor Market and Unemployment - The rising unemployment rate is attributed to tight monetary policy, and Miran expresses concern that failure to cut rates could hinder labor market recovery [6][7]. - Miran emphasizes the need for a forward-looking approach in policy-making to address the challenges in the labor market [7]. Housing Market - Miran highlights the importance of easing mortgage rates, noting that while financial conditions may appear loose due to the stock market, the housing market remains tight [8]. - He believes that cutting interest rates will eventually lead to improved financial conditions in the housing market [8].

Core Viewpoint - Boise Cascade Company (NYSE:BCC) is facing challenges due to its connection to the housing market, which is currently underperforming. The company is considered too leveraged to a specific segment of the market, making it less favorable compared to larger home improvement retailers, especially in the context of potential Federal Reserve rate cuts [1]. Group 1: Company Overview - Boise Cascade Company manufactures engineered wood products and plywood, and distributes building materials such as lumber, siding, roofing, and millwork [2]. - Third Avenue Management has initiated new positions in Boise Cascade Company, indicating interest in the building materials distributor and manufacturer [2].