Latest news with #HousingMarketIndex
Miami Herald
5 days ago
- Business
- Miami Herald
Billionaire Bill Ackman floats bold fix for the housing market crisis
America's housing market is caught between a rock and a hard place. Sky-high prices and punishing mortgage rates have weighed down the housing market, but billionaire Bill Ackman thinks he's found a way out. His dramatic proposal may seem radical, but it is likely to cut costs, simplify oversight, and substantially reduce borrowing rates for millions. Don't miss the move: Subscribe to TheStreet's free daily newsletter To be fair, his proposal echoes past reform pushes, but the scale and timing make it unlike anything we've heard in years. Unsurprisingly, the skeptics warn of new risks and political landmines, but either way, it's a proposal that has the potential to ripple through the housing market for decades. Image sourrce: Goodney/Bloomberg via Getty Images The U.S. housing market rolled into 2025 carrying the same baggage as last year. Mortgage costs dropped from late-2024 peaks but still remain elevated, with the 30-year fixed averaging at 6.63%. That's naturally kept multiple would-be sellers on the sidelines, while impacting buyer affordability. Related: ChatGPT maker quietly shakes the AI landscape and Elon Musk's xAI Inventory is creeping higher, but demand still remains scarce. June existing-home sales dropped 2.7% month-over-month, despite median prices hitting a record $435,300. To make matters worse, builders aren't plugging the gap with single-family housing starts slipping to an annualized pace of 883,000 units in June. On the flipside, builder sentiment, measured by the National Association of Home Builders Housing Market Index, is deeply in the negative at 33, hampered by costly financing and materials. On the rental end, new multifamily supply has weighed down asking rents, especially for older, more affordable units. Nationally, rents are flat year-over-year, offering some relief from inflationary pressures, but that hasn't made homeownership any easier. Maverick investor Bill Ackman just revealed arguably the boldest housing market proposals in years. In a post on X (formerly Twitter) this past weekend, he advocates merging Fannie Mae and Freddie Mac, then taking the combined mortgage giant public. Related: Surprising AI chip stock is up 90% in 30 days (and still climbing) His idea comes as the Trump administration reportedly weighs IPOs for the government-sponsored enterprises (GSEs), potentially valuing them near the $500 billion region. Ackman feels that a single platform will cut costs and streamline oversight while lowering mortgage rates. The role of Fannie and Freddie These GSEs purchase mortgages from lenders, package them into mortgage-backed securities (MBS), and then sell them to investors. This cycle efficiently recycles capital back to lenders so they can continue making loans. These entities have been under federal conservatorship since the 2008 financial crisis and have proven to be critical in keeping the 30-year fixed-rate mortgage widely available. With that said, it's imperative to assess the potential impacts of a merger/IPO, of which some include: Rates & g-fees: Cost savings will only lower mortgage rates if the merged entities capital requirements and profit goals facilitate it. The Urban Institute estimates the guarantee fees ("g-fees") could potentially change by 10–25 basis points with just a few tweaks to these assumptions. However, IPO uncertainty will likely cause mortgage-backed securities (MBS) spreads to widen for a while, pushing borrowing costs up in the Since 2019, both GSEs have already issued a single "Uniform MBS" in pooling liquidity, so merger-related gains may likely be a lot smaller than the headlines structure & risk: Merging into a uniform (GSE) will effectively club the operational and financial risk in a single place. Hence, if something goes wrong, the entire housing finance system might be affected. Consequently, the Federal Housing Finance Agency (FHFA) and the Treasury will need to step in and efficiently balance keeping mortgages affordable while meeting shareholder profit goals. More News: Jim Cramer delivers straight talk on tricky S&P 500 marketBank of America drops shocking price target on hot weight-loss stock post-earningsJPMorgan drops 3-word verdict on Amazon stock post-earnings Of course, with mortgage rates around 6.63% straining affordability, even modest g-fee relief could help at the margin. However, it's unlikely to solve inventory shortages or macro headwinds, which is why the FHFA/Treasury need a detailed plan of action. Over the weekend, President Donald Trump tossed gasoline on the housing finance debate, floating an idea that is right up Bill Ackman's alley. Trump floated the idea of folding Fannie Mae and Freddie Mac into a single, publicly traded "MAGA" giant. To be fair, it's not the first time D.C. has discussed the idea of a sweeping GSE overhaul. Back in 2019, Trump's Treasury wanted to take Fannie Mae and Freddie Mac out of government control and rebuild their finances. Related: Warren Buffett's stock sends louder signals than Berkshire's earnings beat However, the talk didn't dovetail into potentially merging the two GSEs. Outside of Washington, though, the idea has crept up on multiple occasions. Earlier in April, University of Maryland professor Clifford Rossi suggested that merging the two entities before making them private could cut costs and significantly reduce the risk of a system-wide failure. Similar "one combined company" plans were also suggested by major think tanks as far back as 2016. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
&w=3840&q=100)
First Post
18-06-2025
- Business
- First Post
US retail sales post biggest drop of 2025 as tariffs and economic worries bite
Amid warnings of a grim second half of the year, US retail sales fell 0.9%. The worse-than-expected decline coincided with decline in manufacturing and loss of home-buyer sentiment to lowest in three years. read more US retail sales fell 0.9 per cent in May — worse than the economists' expectation of a 0.6 per cent fall. This is This was the sharpest monthly decline in retail sales since January and the second consecutive decline after sales fell 0.1 per cent in April. The retail sales decline is one of the many adverse markers that economist and business leaders interpret as a sign of incoming troubles. The adverse markers have emerged at a time when US President Donald Trump's trade policies, primarily driven by tariffs, have sown uncertainty in global trade and have plunged the United States into fears of inflation — or something worse known as 'stagflation' in which inflationary and recessionary pressures coexist. STORY CONTINUES BELOW THIS AD Industrial production falls, home-builder sentiment lowest since 2022 Beside retail sales decline, industrial production fell 0.2 per cent in May for the second time in three months. The fall in industrial production is a sign that the uptick in economic activity in the first quarter is now over. The 0.2 per cent decline was more than 0.1 per cent forecast by economists in a survey conducted by Wall Street Journal. The NAHB/Wells Fargo Housing Market Index, which measures home-builder confidence, fell to the lowest since 2022. In retail sales as well as industrial production, automobile sector was the only promising sector. Manufacturing rose 0.1 per cent in May compared to 0.5 per cent contraction the previous month on the back of a jump in automobile production. Excluding automobiles, manufacturing fell 0.3 per cent. Trump's tariffs are doing little to support investment in domestic manufacturing capacity by making foreign-produced goods less competitive, said Samuel Tombs, the Chief US Economist at Pantheon Macroeconomics, to MarketWatch. Foreign companies may also be hesitant to source US-manufactured goods out of concern that their governments may impose new tariffs if the trade war intensifies, Tombs further said. In May, vehicles and parts output increased 4.9 per cent. Retail sales fell 0.3 per cent excluding automobiles. This was worse than the estimate of 0.1 per cent again. 'Americans bought cars in March ahead of tariffs and stayed away from car dealerships in May. Families are wary of higher prices and are being a lot more selective with where they spend their money. People are hunting for deals and aren't eager to buy unless they see a good one,' said Heather Long, the Chief Economist at Navy Federal Credit Union, told CNBC. STORY CONTINUES BELOW THIS AD Grim forecasts for second half — thanks to tariffs In the midst of such markers, economists and business leaders have warned it is about to get worse. Sal Guatieri, a senior economist at BMO Capital Markets, said, 'Trade-war uncertainty, rising input prices, and slowing US and global demand are expected to weigh on manufacturing activity this year. We are forecasting a large pullback in business-equipment spending in the second quarter following a first-quarter surge.' Sam Bullard, senior economist at Wells Fargo, said the outlook for industrial production over the rest of the year 'is dim, as slowing economic growth and the strains of tariffs lead to quarterly declines over the final three quarters of 2025'. Michael Pearce, the Deputy Chief Economist at Oxford Economics, told Reuters, 'Tariff announcements have had a clear impact on the timing of large-ticket purchases, notably autos, but there are few signs yet that tariffs are leading to a general pullback in consumer spending. We expect a more marked slowdown to take hold in the second half of the year, as tariffs begin to weigh on real disposable incomes.' STORY CONTINUES BELOW THIS AD The weakening of US dollar as a result of loss of confidence in the currency because of Trump's trade policies, is a sign 'that inflation will pick up this summer and into the fall as prices start to reflect the higher costs for goods from enacted tariffs' Ben Ayers, a senior economist at Nationwide, told the news agency.
Business Insider
18-06-2025
- Business
- Business Insider
Stock Market News Review: SPY, QQQ Sink amid Israel-Iran Escalation, Weak Retail Sales Data
Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) closed in red territory as the Israel-Iran conflict drags into its fifth day. On Tuesday, President Trump convened a National Security Council meeting in order to discuss the turmoil. According to Axios, Trump is ' seriously considering ' launching an attack on Iran's nuclear facilities. The U.S. has also beefed up its defensive measures by sending planes and aircraft carriers to the Middle East. Confident Investing Starts Here: The SPX and NDX opened the trading session lower after May's retail sales data showed a 0.9% month-over-month (MoM) fall, lower than the estimate for a 0.6% drop. Core retail sales, which exclude volatile items like gas, cars, and building materials, rose by 0.4% MoM, ahead of the estimate for a 0.3% rise. The lower opening comes despite the U.S. and UK finalizing their trade deal reached last month. Under the deal, tariffs on the first 100,000 UK vehicles imported to the U.S. will be set at 10%, down from 27.5%, while the U.S. baseline tariff on imported UK goods will remain in place. In the meantime, both sides will continue to negotiate steel, aluminum, and pharmaceutical tariffs. The market's muted reaction to the signed deal is likely due to the fact that it contained no new material developments compared to the initial deal. Meanwhile, sentiment among single-family homebuilders is on the decline. June's Housing Market Index (HMI) tallied in at 32, the lowest reading since December 2022 and below the estimate for 36. A reading above 50 signals that most surveyed homebuilders feel confident about the current and near-term housing landscape. The main market catalyst in the short-term remains the Israel-Iran conflict. In a Truth Social post, Trump demanded ' UNCONDITIONAL SURRENDER ' from Iran and said that the U.S. knows where Supreme Leader Ayatollah Ali Khamenei is hiding but will refrain from targeting him.
Miami Herald
13-06-2025
- Business
- Miami Herald
Here's how US tariffs may affect home prices in 2025
Here's how US tariffs may affect home prices in 2025 New tariffs are set to increase the cost of building, buying, and renovating homes-creating another barrier in an already tough housing market. NewHomeSource, a new home listings site with customer reviews, breaks down how tariffs will impact homebuyers. Why it matters: With high mortgage rates and low inventory, homebuyers are already struggling. Now, tariffs will raise prices even further. "A lot of the uncertainty [in the housing market] comes down to tariffs," says New Home Source chief economist Ali Wolf. What's happening: The U.S. government is imposing tariffs up to 25% on key goods from Mexico and Canada. Goods from China were temporarily rolled back from 145% to 30% as of May 14, 2025, for a span of 90 days. On June 11, President Donald Trump said the U.S. and China reached an agreement, with tariffs on Chinese imports set at 55%. See More: Here's How Trump's Tariffs May Affect Home Insurance Prices in 2025 Key materials affected by tariffs: Lumber: A 25% tariff on Canadian goods adds to an existing 14.5% duty, raising softwood lumber prices by nearly 40%.Concrete, cement, gypsum: About 25% of the U.S. supply is imported, mainly from Canada and and aluminum: Both materials, essential for framing and roofing, are now subject to a 25% and fixtures: Many products are sourced from China, with price increases expected. Industry experts say construction costs could rise 4% to 6%.That adds $5,000 to $20,000 to the price of a new surveyed by the National Association of Home Builders in March estimate a smaller, but still notable, $9,200 Tomalak, Zonda's principal, advisory of building products, says "including a 2.5% baseline rate [of inflation], tariffs could increase the cost of building materials by 9%." First-time buyers and those looking for affordable homes will feel it most. "We're in an environment where affordability is stretched and we don't want to be adding to any additional costs. Tariffs could play a role in making that worse," says Wolf. "The tariff impact isn't isolated to just new homes, though," adds Wolf. "If you are considering an existing home that needs to be remodeled, you might be surprised with how much money the whole project will cost." See More: How Credit Scores Are Shaping the 2025 Housing Market Differing opinions on cost increases due to tariffs The National Association of Home Builders' April Housing Market Index estimates tariffs could add $10,900 to the cost of a typical new home. However, in Zonda's Q2-2025 Housing Market Forecast, data points to the cost only rising by $5,000. Given the flux surrounding global tariffs, it's difficult to predict a static number for the coming months. Where prices are already increasing Manufacturers may continue to raise prices regardless of tariffs. Tomalak reports that the three major roofer manufacturers - Owens Corning, CertainTeed, and GAF - have already raised prices between 7% to 10% as of April 1. Will tariffs affect other areas of a new home purchase such as insurance? The short answer - probably yes. "Tariffs on imported building materials will increase the cost of rebuilding a home, which will raise home insurance premiums," says Insurify's Matt Brannon. With additional reporting from Carmen Chai. This story was produced by NewHomeSource and reviewed and distributed by Stacker. © Stacker Media, LLC.
Miami Herald
19-05-2025
- Business
- Miami Herald
Builders Have Bad News for Donald Trump's Housing Market
Builder confidence in the U.S. housing market fell sharply in May, marking its lowest level since November 2023, according to a new report from the National Association of Home Builders (NAHB). Developers are contending with a sluggish selling season and mounting economic pressures. The NAHB/Wells Fargo Housing Market Index (HMI) dropped six points to 34, mirroring the November 2023 reading and only slightly above December 2022's low of 31. The downturn comes at a sensitive moment for President Donald Trump, whose administration faces growing scrutiny over trade policy and inflation. Per the NAHB, persistent uncertainty around tariffs, rising building material costs, and sustained high interest rates have rattled builder sentiment. These headwinds have forced builders to slash prices during the peak homebuying season. The decline in builder confidence poses challenges for a housing sector central to Trump's economic messaging. The spring season—typically one of the most active periods for home sales—has failed to gain traction. In response, 34 percent of builders cut home prices in May, up from 29 percent in April, with an average price reduction of 5 percent. Sales incentives remained elevated, with 61 percent of builders offering them, according to the NAHB. The NAHB/Wells Fargo Housing Market Index is based on a monthly survey asking builders to rate current sales conditions, expectations for the next six months, and prospective buyer traffic. All three components declined in May: current sales dropped eight points to 37, future sales dipped one point to 42, and buyer traffic slid to 23. A reading below 50 indicates that more builders view conditions as poor than good. The timing of the latest survey data is also notable. Approximately 90 percent of builder responses were collected before the May 12 announcement that the U.S. and China had agreed to suspend tariffs for 90 days to resume trade talks. The U.S. and China agreed to lower their rates by 115 percentage points. This agreement lowered the tariffs imposed on Chinese goods by President Donald Trump to 30 percent and those imposed on U.S. goods by Beijing to 10 percent. Trump initially announced his sweeping global tariffs on April 2, including a baseline 10 percent on all imported goods and "reciprocal" tariffs. While this may offer some future relief, it did not factor into the May confidence reading. Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Builders face the usual challenges of volatile commodity prices, but add in the unpredictable impact of tariffs, and it gets even tougher. Price swings on materials make it hard to maintain stable margins, adding pressure to an already tight market." Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Uncertainty around tariffs and the unknown construction costs are certainly playing into homebuyer and builder sentiment, but I really think the driver is overall housing prices and interest rates. A lot of people are choosing to stay on the sidelines, waiting for the housing market to soften and interest rates to tick down, with the hopes they can find a home and mortgage that is more affordable." While builders await the effects of the temporary tariff suspension and potential tax reforms, confidence levels remain vulnerable to broader economic shifts. "Builders buy in bulk and rely on stable margins. When input costs are unpredictable, it's nearly impossible to price homes accurately," Thompson said. "This affects both the affordability for buyers and the profitability for builders, creating a ripple effect throughout the market." Any sustained progress in trade negotiations or monetary policy adjustments could help boost sentiment in the months ahead. Until then, developers are likely to continue leaning on price cuts and incentives to attract hesitant buyers. "Just like any market, the housing and interest rate markets are nearly impossible to time, and that could be costing potential homebuyers dearly... Waiting for a housing and interest rate correction or crash may be costing consumers more than it's worth," Powers said. Related Articles Florida's Population Makes Major ShiftTexas Housing Market Enters 'Major Correction Phase'America's Most Expensive Area Sees Surge in People Trying to Sell HomesHousing Shortage Hurting Middle-Class Americans Most 2025 NEWSWEEK DIGITAL LLC.
