Position portfolios for policy and geopolitical uncertainties, says Wells Fargo's Scott Wren
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Yahoo
an hour ago
- Yahoo
US homebuilder sentiment dips back to lowest level since late 2022
(Reuters) -A gauge of U.S. homebuilder sentiment fell unexpectedly in August, slipping back to its lowest level in more than two-and-a-half years, with more than a third of residential construction firms cutting prices and roughly two-thirds of them offering some form of incentive to lure buyers sidelined by still-high mortgage rates and economic uncertainty. Shop Top Mortgage Rates Your Path to Homeownership A quicker path to financial freedom Personalized rates in minutes The National Association of Home Builders/Wells Fargo Housing Market Index fell to 32, matching the lowest reading since December 2022, from 33 in July, the association said on Monday. Economists polled by Reuters had expected the sentiment score to improve to 34. NAHB's measure of current sales conditions declined, and an index tracking future sales expectations was unchanged. Buyer foot traffic, though, edged up to its highest level since May, though it remains at a low level. On a regional basis, sentiment among builders in the Northeast skidded to its lowest level since January 2023, while it was unchanged in the South and Midwest and modestly improved in the West. "Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward," said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, North Carolina. "Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes." Mortgage interest rates have shown recent signs of easing amid expectations the Federal Reserve will resume its interest rate cuts at a policy meeting next month. The average rate on a 30-year fixed-rate mortgage, the most common U.S. home loan, slipped to 6.58% last week, the lowest level since last October, according to data from Freddie Mac. Rates have fallen nearly half a percentage point since the start of the year. "Given a slowing housing market and other recent economic data, the Fed's monetary policy committee should return to lowering the federal funds rate, which will reduce financing costs for housing construction and indirectly help mortgage interest rates," NAHB Chief Economist Robert Dietz said. The use of price and other incentives remains high, with 37% of builders cutting prices - by an average of 5% - while 66% offered some form of sales incentive, the highest percentage in the post-COVID-19 era. On Tuesday the Census Bureau is due to report data for July on ground-breaking volumes and building permit filings for new homes, both of which remain depressed. In June, single-family housing starts fell to an 11-month low and permits for new homes plunged to the lowest level in more than two years. Economists polled by Reuters see little prospect for improvement in July's data.
Bloomberg
an hour ago
- Bloomberg
US Homebuilder Sentiment Retreats as Buyers Lack Motivation
US homebuilder confidence fell this month to match the lowest level since 2022, forcing firms to lean more heavily on incentives to counter high mortgage rates and persuade unmotivated buyers. An index of housing market conditions from the National Association of Home Builders and Wells Fargo slipped 1 point to 32 in August. Economists surveyed by Bloomberg expected a slight gain in the gauge, based on the median projection.
CNBC
2 hours ago
- CNBC
Wells Fargo hikes S&P 500 target as U.S. tariffs get delayed again
The U.S. pushing back many of the tariffs announced earlier this year will help Wall Street through the end of the year, according to Wells Fargo. The bank's Investment Institute raised its year-end S & P 500 target range to 6,300-6,500 — putting the midpoint at 6,400. Strategist Darrell Cronk previously expected the benchmark to end 2025 between 5,900 and 6,100. "We believe delayed tariff increases will mitigate this year's U.S. economic growth slowdown and extend the soft patch into early 2026. This should dilute positive impacts from frontloaded tax cuts and deregulation during the first part of next year. We think the protracted tariff implementation will mute and defer the brunt of tariff-related price pressures until later this year and into early 2026," Wells said in a note to clients Friday. President Donald Trump in April unveiled steep charges on imported goods arriving from other countries, but soon after pushed back the implementation of those duties. That helped the S & P 500 recover from a sharp sell-off that nearly tipped the benchmark into a bear market. The index last week hit a fresh record high of 6,481.34. .SPX YTD mountain SPX year to date "Extending tariff implementation over a longer period coupled with the passage of the tax provisions in the [One Big Beautiful Bill] has improved investor sentiment and our forecast for equity earnings and returns," Wells Fargo said. Not everyone is as sanguine on stocks right now. Evercore ISI's Julian Emanuel who, at 5,600, has the lowest S & P target in CNBC's Market Strategist Survey , thinks the benchmark could pull back by anywhere from 7% to 15% from current levels. He said Federal Reserve Chair Jerome Powell's speech this coming Friday at the Jackson Hole symposium could send the market lower if investors leave with less confidence toward central bank rate cuts. "Powell on 8/22 is likely to indirectly signal a 25bp rate cut on 9/17/25 – stressing 50bp is not an option absent Labor market deterioration, and Oct and/or Dec cuts will be 'data dependent.' For a market that was eager to embrace '50 in Sept,' a balanced view could catalyze a near term -7% to -15% pullback into October, within the context of the Structural AI Driven Bull Market," Emanuel said in his weekly note to clients. UBS' wealth management arm also sees potential for "near-term volatility" with the market at current price levels. "Equity valuations are now elevated after a substantial rally in recent months," head of U.S. equities David Lefkowitz wrote. "The economic impact of U.S. tariffs is currently feeding through, with the labor market weakening and inflation rising. Uncertainty remains—regarding the scale, distribution and second-order effects." Still, Lefkowitz expects stocks to be higher a year from now.
