Last September, US housing market activity appeared to pick up, as mortgage rates decreased from 7.5% to 6.6% and in fact home listings increased. But mortgage rates have since risen back to 7.1%, squarely locking away potential buyers. Pending home sales, a leading indicator for home sales, are still about 30% below the pre-pandemic average and declined 5% in December of last year, the latest month reported. Low home sales are negatively impacting home improvement retailers, furniture retailers and others whose sales are impacted by people moving houses. This week, two of the largest home improvement retailers in the US, Home Depot and Lowe’s, will report results. The market seems to anticipate poor results as the share prices of both have been sliding lower. Over the long term, Millennial and Gen Z household formation, housing shortages and an aging housing stock are supportive of their growth.
Source: US National Association of Realtors, December 2024.