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Weekly Update 11/22/2024: Markets Close Earnings Season

Insights
  • Walmart raises guidance on strong quarterly results
  • Deere faces challenging year

Home sales data

In a light week for U.S. economic releases, government data showed that housing starts declined in October to the slowest pace in three months. That’s not too surprising given that hurricanes Helene and Milton ravaged the U.S. Southeast last month. New single-family home construction fell 6.9% contributing to a 3.1% decline in overall housing starts including multifamily homes. The 1.31 million starts on an annualized basis fell below the median 1.33 million estimate in a survey of economists from Bloomberg. Building permits, a proxy for future construction, fell 0.6%. The U.S. South comprises the largest share of homebuilding in the country, and it fell 8.8% in the wake of the hurricanes. Housing starts in the Northeast fell 33% to the slowest pace since May which countered strength in the West, which saw new construction activity jump to the highest level since the start of the year. Mortgage rates near 7% also provided a stiff headwind to further construction demand.

Existing home sales, which comprise approximately 90% of housing contracts, rose 3.4% in October from September, according to data from the National Association of Realtors released today. That was above consensus expectations for a 2.9% gain and followed a 1.3% drop in September. The inventory of available homes did edge higher by 0.7%, but the market is still considered tight. That is resulting in high prices. The median sale price last month rose 4% from a year earlier to $407,200, the highest ever for any October. Previously-owned homes are catching up in price to new homes, with the premium down to a historic low of just 1%. Existing home prices are rising faster than new ones thanks to inventory tightness while builders are offering sales incentives to move newly built residences. In October, 59% of existing homes were on the market for less than a month, up from 57% in September. Mortgage rates continue to be a headwind with a 30-year fixed mortgage up to 6.90% in the week ending November 15, the highest since early July, according to Freddie Mac. Housing activity is likely to wane now that the holiday season is around the corner with families more focused on gatherings than open house showings and winter weather arriving.

Company Events

SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.

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