Golden Handcuffs
During the pandemic, Americans experienced historically low interest rates. While this was good news for homeowners who bought during that time period and were able to lock in mortgages at 3% or lower, it’s led to a dilemma for prospective homebuyers today.
Given inflation and the Fed’s string of federal funds rate raises, the average mortgage rate in the US now hovers above 6%. This has led homeowners who locked in low-rate mortgages during the pandemic to stay put, rather than list their houses and risk losing their ultra-low rates. That, in turn, has kept the housing supply low and made the market more competitive and pricey for would-be buyers.
In March, existing home sales dipped 2.4% from February. This week, April’s report will be issued along with other key housing data and earnings from construction retailers and heavy machinery manufacturers. Wall Street will be looking to these releases to piece together a comprehensive view of where the housing market is currently — and where it’s headed.
Here’s everything else on the horizon.
Economic Data
Today, the week will kick off with a series of speeches from Fed officials, including Federal Reserve Bank of Atlanta President Raphael Bostic, Federal Reserve Bank of Richmond CEO Thomas Barkin, and Federal Reserve Governor Lisa Cook. Wall Street will listen closely to their comments for hints of the rate hike policy pause anticipated in June.
Tomorrow, a flurry of business reports will be released, including retail sales, industrial production, and business inventories. Notably, industrial production increased just 0.5% annually in March, the lowest increase in two years.
On Wednesday, investors will receive plenty of housing data, including building permits and housing starts. After surging 7.3% in February, housing starts decreased 0.8% in March on a month-over-month basis. Additionally, investors will get an update to the 30-year fixed mortgage rate, which currently sits at 6.48%.
On Thursday, an update on the number of jobless claims will be released. For the week ended May 6, 264,000 Americans filed for unemployment benefits, the highest since October 2021. Additionally, investors will get an update on the number of existing home sales in the US during April. In March, existing home sales dipped 2.4% from February.
Earnings
Today, United Insurance (UIHC) will kick off the earnings week. Investors will hope the insurance provider addresses the going-concern warning it issued in April, leading shares to plummet by almost 50%. Fittingly for a Monday, Monday.com (MNDY) will also report.
Tomorrow, the nation’s largest DIY home improvement store, Home Depot (HD), will give investors an update on its business. The construction chain’s revenue has been on the decline for the past two quarters. Investors will look to see if this is becoming a long-term trend.
The second-half of the week will be dominated by retail reports, with Target (TGT) and TJX Companies (TJX) setting the tone on Wednesday. As two of America’s favorite shopping centers, these stores will offer a close look at how American consumers are spending.
On Thursday, two of the world’s biggest companies, Walmart (WMT) and Alibaba (BABA), will report on their respective businesses. The latter will give investors a better understanding of spending habits overseas.
On Friday, Deere & Company (DE) will round out the week. The agricultural manufacturer, doing business as John Deere for close to two centuries, may address the manufacturing defect causing a number of tractors owned by the New Jersey State Government to catch fire in recent weeks. Or it might simply tout its latest branded LEGO set.
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