Homebuilders

High rates and home inventory shortages have increased the importance of builders as referral partners. Here's how some mortgage lenders partner with them.

Lowe's Cos. said its sales will fall further this year as consumers continue to hold off from sprucing up their homes amid higher mortgage rates and a drop in new construction projects.

Sales of new homes in the U.S. edged higher in January as builders and buyers capitalized on lower mortgage rates at the start of the year.

Since mid-January, "we have seen a meaningful uptick in demand that has continued through this past weekend," Toll Brothers Chief Executive Officer Doug Yearley said in an earnings call Wednesday. 

U.S. new-home construction sank at the start of the year by the most since the onset of the pandemic, indicating the recovery in the housing market will be gradual as many buyers await a further decline in mortgage rates.

The National Association of Home Builders/Wells Fargo gauge of housing market conditions rose by 4 points to 48 this month, according to data released Thursday.

The company's building unit saw income slow, but the mortgage banking division number accelerated on both a quarterly and annual basis.

In the quarter, 80% of the homebuilder's mortgage customers used the rate buy-down incentive, the company said on a call with analysts.

Sekisui House Ltd. announced a $4.9 billion agreement on Thursday to buy MDC Holdings Inc., ikely the biggest U.S. purchase of a homebuilder by a Japanese company.

Lending activity among builders surged over 22% annually in December, but the growing share of FHA-backed borrowing in the segment took a step back for the first time in four months, the Mortgage Bankers Association said.

Single-family home construction fell by the most since July 2022, following a surge in November, while multifamily projects rose to a five-month high.

But the index is still well below pre-pandemic levels, suggesting momentum may be slow to build with borrowing costs still twice as high as they were two years ago.

Purchases of new single-family homes decreased 12.2% to a 590,000 annual pace last month, a one-year low, government figures showed Friday.

Toll Brothers Inc. stock rose as the homebuilder's executives pointed to "solid" demand in recent weeks as mortgage rates pulled back from two-decade highs. 

Real estate finished November as the second best performing group in the S&P 500 Index adding 12%, trailing slightly behind tech's 13% gain. The momentum was fueled by bets the central bank may begin cutting rates as early as next year.

Residential starts increased 1.9% last month to a 1.37 million annualized rate, the highest in three months, government data showed Friday.

With mortgage rates retreating and inflation abating, short sellers who'd been capitalizing on the three-month slump in homebuilder stocks may need to prepare for a rebound toward year-to-date highs.

The broader economy added 150,000 positions, a number the bond market initially read as likely to soften rates, but some economists interpreted differently.

The transactions grew between second and third quarter, with the new-home market seeing one of its largest surges in cash-buying in 13 years.

The company's builder and mortgage banking segments both ended up in the black, as sales for new constructions outperform the existing-home market.