D.R. Horton forecast 2025 revenue and home deliveries below estimates today. That pushed homebuilder stocks down.

In terms of margins, D.R. Horton is still above pre-pandemic levels despite making adjustments in some markets to keep sales going

https://x.com/ResidentialClub/status/1851409168894189704

With today's 7% stock decline, D.R. Horton's share price is up 10% on the year

The mortgage market is experiencing a severe recession

It's one of the worst mortgage downturns in history

Mortgage purchase apps are at the lowest levels of the post 1995 era

Many would-be sellers can't afford to sell & buy something else at current rates—lock-in

Thread 🧵 Traditional refi is RIP right now

"Economy good = people buy houses. Economy bad = people refinance houses. We [loan officers] win every time. Just not this time" -@AdvisorJohn

In the 2007-12 bust, purchases fell off while refi kept going

Right now, both are pinned down

JPMorgan economists: A secular housing shortage in the U.S. has thus far prevented a pullback in housing construction employment induced by spiked interest rates

"even after accounting for lags, we document below that housing starts and construction employment should already be quite a bit lower than where they are now" When it comes to Fed-induced recessions, employment in residential building construction typically starts declining well before the recession takes hold.

https://x.com/NewsLambert/status/1587809011214213120?s=20

The mortgage market is experiencing a severe recession.

It's one of the worst downturns in mortgage market history.

Traditional refi is RIP right now.

And this week, mortgage purchase apps hit the lowest level of the post 1995 era.

Thread 🧵 Layoffs (and mergers) are mounting in the mortgage industry.

Just ask @mortgagetruth.

Back in Feb. 2007, he started tracking mortgage layoffs and closures. He's back at it this cycle... and the list is growing—fast. thetruthaboutmortgage.com/a-list-of-rece…

Meet the epicenter of institutional home buying 🏡👇

Atlanta.

While institutional firms own 0.73% of the U.S. single-family stock, they own 4.4% in Atlanta, finds @ParclLabs
resiclubanalytics.com/p/regional-hou…
According to @ParclLabs, 36.8% of all institutional-owned homes can be found in just 6 markets: Atlanta (where 13.3% of institutional-owned homes can be found), Phoenix (5.4%), Dallas (5.4%), Houston (4.3%), Tampa (4.2%) and Charlotte (4.2%)
resiclubanalytics.com/p/regional-hou…

Austin home prices have further to fall

During the '00s crash, it took Austin 30 months to fall 6.7% peak-to-trough

This time around, Austin has fallen 11% in just 14 months

How did Austin—which dodged the worst of the 08 crash—become the epicenter of the pandemic correction? Among the 385 major housing markets tracked by Freddie Mac, only 35 markets are still down +3.00% from their pandemic peak.

Austin is down the most (-11%)

Keep in mind, that national home prices, as tracked by the Freddie Mac House Price Index, set a new all-time high in July.

Inventory drop day 🏡📊

These are markets you all requested yesterday (I'm done taking requests).

Let's start with the nation's largest housing market: New York. Inventory in L.A.

The U.S. housing market isn't just bifurcated by region.

It's also bifurcated within regional markets.

Just look at San Jose, where "upper price tier" homes are down 9.05% from peak while "lower price tier" homes just set a new all-time high in July 2023. As mortgage rates spike/housing affordability deteriorates, buyers lower their expectations thus keeping the bottom half of the market warmer than the top half.

In March 2022, Zillow predicted that the biggest U.S. home price uptick still awaited, and that by February 2023 prices would be up another 17.8%.

At the same time, Zillow was offloading its remaining "flips" in overheated markets at peak prices. Even as the mortgage rate shock was clearly manifesting, Zillow argued in spring 2022 that home price appreciation had a lot of gas left in the tank & wasn't normalizing.

The Pandemic Housing Boom saw U.S. home prices jump over 40% in just over 2 years.

It takes time for property taxes to catch up. But it’s coming.

Look no further than Butler County, Ohio where residents are staring down a very big property tax hike.
wcpo.com/news/local-new… Local officials realize this is politically dangerous for them.

In the article above, Butler County OH officials are scrambling to see if they can do anything to lighten the looming property tax hikes.

#NEW Invitation Homes—the largest owner of U.S. single-family rental homes—was a net seller for the third straight quarter.

It sold off more homes (378 homes) than it acquired (276 homes) in Q2 2023. That said, it's likely that Invitation Homes will be a net buyer again—at least for the third quarter of 2023.

The historic deterioration in housing market affordability, as told by one chart.

It was a one two punch: Overheated house price growth (March '20 to June '22) followed by last year's mortgage rate shock (going from 3% to 7%) If you're on Meta's new site, you can find me at "newslambert"

The CEO of Fortune 500 homebuilder D.R. Horton reveals how he cornered the housing market amid a historic affordability squeeze.

Here's my Q&A with @DRHorton CEO David Auld.
fortune.com/2023/07/01/hou… Despite the mortgage rate shock, @DRHorton just moved up to its highest ever ranking on the Fortune 500 list (No. 120).

via @FortuneMagazine

Starwood to sell off 2,000 single-family rentals.

via @pat_clark
bloomberg.com/news/articles/… 3 things.

Since June 2009, the U.S. economy has only been in recession for a total of 3 months Feb. 2020 to April 2020

Last year's mortgage rate shock saw national inventory levels (i.e. active listings) briefly rise as demand pulled back & homes sat on the market longer.

"Briefly" is the key word.

Soon, national inventory will once again be negative on a year-over-year basis. Back in February, 190 of the nation's 200 largest markets were up year-over-year for inventory.

By May, that was down to 134 markets.

That figure will free fall this summer (despite seasonality pushing inventory higher)

The most interesting housing market in America: Austin.

During the '00s housing crash, it took Austin 43 months to fall 8.5% peak-to-trough.

This time around, Austin has fallen 10.02% in just 9 months. fortune.com/2023/06/03/aus… Among the nation's 400 largest housing markets, 226 just hit (or re hit) their all-time high for home price in April 2023.

Among the other 174 markets, 38% are down by 5.00% or more.

Austin (-10.02%) is down the most.
fortune.com/2023/06/03/aus…

The average 30-year fixed mortgage rate heads into the weekend at 6.88%.

Spread: 321 bps Two things.

1. With the debt ceiling drama over, the spread has come down from last week's peak of 333 bps.

2. We've been over 6.70% mortgage rates* for about 3 full weeks. Like @LoganMohtashami says, duration matters.

Relative to the past decade, 2023 mortgage borrowers are stretching themselves thin. It's true that mortgage borrowers at large are doing well (see below).

It's also true that spiked mortgage rates (following a historic run up in prices) means some new borrowers are getting stretched.

We've went 9 straight months without setting an all-time high (ATH) for U.S. home prices.

IF seasonally adjusted prices, as measured by Case-Shiller, keep rising at March's pace (+0.42%), we'd set a new ATH once the September 2023 reading publishes. IF that happened, the streak (of months without an ATH Case-Shiller) would top out at 15 months this cycle.

The early '90s correction made it 37 months, and the '00s crash went 116 months.

After peaking in May 1990, national home prices didn't set another all-time high until 37 months later in July 1993.

So far, the pandemic housing correction has seen us go 8 months since setting our last national all-time high (June '22). The reason it's 8 months rather than 10 months, is because Case-Shiller runs 2 months behind. We'll get the March reading later this month.