Housing market slowdown

What happened: U.S. housing starts plummeted 9.8% in May, while existing home sales dropped 3.6% in March, 1.7% in July, and 2.4% in June, driven by climbing mortgage rates and a shortage of affordable inventory. Single-family housing starts fell for the third straight month in June, with permits at a 10-month low. Home prices, though declining, remain high, with the median existing home price hitting a record $430,000 in June. In the UK, flats are struggling to sell due to high prices and lack of affordability.

Market impact: The slowdown affects homebuilders like Lennar (LEN) and D.R. Horton (DHI), with new residential construction and existing home sales declining. Mortgage rates, now around 5.5%, deter buyers, impacting lenders like Wells Fargo (WFC) and Bank of America (BAC). Real estate investment trusts (REITs) like American Tower (AMT) and Prologis (PLD) may face reduced demand for residential properties.

What to watch next: The next release of U.S. existing home sales data on August 19 will provide insight into whether the slowdown continues. The Federal Reserve's interest rate decision on September 21 will influence mortgage rates, further impacting the housing market. Additionally, the S&P CoreLogic Case-Shiller Home Price Indices on September 27 will offer updates on home price trends.