Latest / Markets with Megan: A Quick Financial Markets Update / Bad Housing News: Home Sales Drop 7.3% | S3 E174 | 10-20-26

Transcript

Bad Housing News: Home Sales Drop 7.3% | S3 E174 | 10-20-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Talk about some terrible housing data.
• 0:03
  Megan Horneman: It's Tuesday, October the 20th, and this is Markets with Megan.
• 0:07
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, colleagues, anybody who's interested in those headlines that we get about economic data on a regular occurrence and what it means for the markets.
• 0:20
  Megan Horneman: Well, today we got some very disappointing news from the housing perspective.
• 0:24
  Megan Horneman: Let's dig right into what we got.
• 0:26
  Megan Horneman: So we got the housing starts, building permits, and pending home sales.
• 0:30
  Megan Horneman: The housing start data that fell much more than expected.
• 0:34
  Megan Horneman: It fell 5.2%.
• 0:35
  Megan Horneman: The market was actually looking for an uh uptick in housing starts for the month, but they fell again 5.2%.
• 0:43
  Megan Horneman: This is close to the worst level we've seen since the pandemic.
• 0:46
  Megan Horneman: And it's been three consecutive monthly declines now of close to a 5% drop.
• 0:52
  Megan Horneman: And housing starts have fallen in six out of the past nine months for this year alone.
• 0:57
  Megan Horneman: The multifamily start, so think about apartment buildings, that led the weakness, but we did also see a decline in single-family home starts.
• 1:04
  Megan Horneman: Building permits, these also fell.
• 1:07
  Megan Horneman: This is an indication for future construction.
• 1:09
  Megan Horneman: They didn't fall as much as was anticipated, but completions of housing of homes actually dropped to the weakest in about six years.
• 1:19
  Megan Horneman: Now we also got pending home sales.
• 1:22
  Megan Horneman: Again, very disappointing number, fell a lot more than expected.
• 1:25
  Megan Horneman: They declined 7.3% for the month.
• 1:28
  Megan Horneman: The market was only looking for a drop of about 0.5%.
• 1:32
  Megan Horneman: And they are now also sitting at a record low.
• 1:35
  Megan Horneman: All of the regions that that are monitored, so that's the Northeast, the Midwest, the South, these all fell.
• 1:42
  Megan Horneman: It was led by sharp declines in the West and the South, though.
• 1:46
  Megan Horneman: This follows a report we got yesterday from the NAHB, that's the National Association of Home Builders.
• 1:53
  Megan Horneman: That's their confidence survey.
• 1:54
  Megan Horneman: And it was surprising, but this fell to a record low yesterday.
• 1:58
  Megan Horneman: Home builders are very pessimistic, not only about the future prospects of the housing market, but also the prospective buyer traffic that they're seeing.
• 2:07
  Megan Horneman: That has completely dried up.
• 2:08
  Megan Horneman: Now there's a couple factors that we equate to this.
• 2:11
  Megan Horneman: First of all, mortgage rates for the month of September skyrocketed.
• 2:14
  Megan Horneman: We saw mortgage rates ending the month at 7.3%.
• 2:18
  Megan Horneman: That's the highest we've seen in three years.
• 2:20
  Megan Horneman: We also know that material costs are increasing and also very difficult because of what's going on with the supply disruptions, the wars, the tariffs.
• 2:30
  Megan Horneman: It's also very difficult for home builders to anticipate what the cost of building a house will eventually be.
• 2:36
  Megan Horneman: So this is really weighing on the housing market.
• 2:39
  Megan Horneman: Now, the housing market residential construction does not make up a significant portion of GDP, but there's those knock-on effects.
• 2:46
  Megan Horneman: So when you buy a house, you typically buy furniture, electronics.
• 2:49
  Megan Horneman: That helps aid retail sales.
• 2:51
  Megan Horneman: These things won't be happening if we have a complete standstill in the housing market.
• 2:56
  Megan Horneman: Now, the equity markets are taking this very very, very good today, probably because two things oil prices are down.
• 3:04
  Megan Horneman: There's some rumblings that maybe US and Iran are talking again.
• 3:08
  Megan Horneman: We'll see, we'll believe that when we see it.
• 3:10
  Megan Horneman: But interest rates are lower today, and that could be on the back of this really disappointing economic data.
• 3:16
  Megan Horneman: So we have lower rates that's that is fueling a rally in specifically the Dow Jones.
• 3:21
  Megan Horneman: Um we're still seeing some pressure on some of the technology names, but we are seeing equity markets uh liking this.
• 3:27
  Megan Horneman: It probably keeps the Fed on hold as well in the month of October at their next meeting, but we're still not ruling out December.
• 3:34
  Megan Horneman: That's all we have today.
• 3:35
  Megan Horneman: If you want to have a history of our podcast, you go to Marcuswithmegan.fm.
• 3:38
  Megan Horneman: Thank you.