Folks, the U.S. housing market is in trouble... Online real estate broker Redfin recently reported that there are about 500,000 more sellers than buyers.

This Is What Homebuilders Have to Do Next By Vic Lederman, editorial director, Chaikin Analytics Folks, the U.S. housing market is in trouble... Online real estate broker Redfin recently reported that there are about 500,000 more sellers than buyers. You might have seen this in the headlines already. And the imbalance shouldn't come as a surprise... You see, 30-year mortgage rates stubbornly remain near 7%. Sure, they're down a bit from the peak in late 2023. But at current levels, payments on new mortgages have roughly doubled since their pandemic-era lows. And it gets worse... According to data from the Federal Reserve Bank of St. Louis, the median new-home price clocks in at about $407,000. That's a roughly 12% decline from the peak of around $460,000 in late 2022. But it's still nearly 24% more than the roughly $329,000 median price at the end of 2019. Put simply, folks are still struggling to afford new homes. And this creates a serious problem for homebuilders. Today, let's look at how the Power Gauge sees this market subsector. And we'll discuss what homebuilders have to do next... Recommended Links: TOMORROW: Critical Update for All Chaikin Analytics Readers Tomorrow, the founder of one of the world's largest independent financial-research firms is stepping forward with an urgent announcement. He'll reveal how making just ONE simple change to the way you follow Marc Chaikin's research could dramatically boost your portfolio returns – by as much as 50% – and potentially make you more money. We recommend you get the facts for yourself... His event tomorrow is 100% free, but you must reserve your spot. This Device Will Soon Be in Every Middle-Class Home in America A breakthrough tech PwC says could be worth $16 trillion is quietly showing up in restaurants, warehouses, and even the operating room. Amazon, Tesla, and Google have committed tens of billions of dollars this year toward this tech, which some experts predict will be in every middle-class household in America in a few short years. Learn the four steps to take to potentially profit from this inevitable trend. A Slow Ramp Back Up in Homebuilding  In the Power Gauge, we measure homebuilders with the SPDR S&P Homebuilders Fund (XHB). And XHB looks downright bad right now... It currently earns a "bearish" rating from the Power Gauge. Digging deeper, only one of the 35 rated stocks in the fund earns a "bullish" rating. This might come as a surprise to you. After all, as measured by XHB, homebuilders soared more than 100% from the end of 2022 to their peak near the end of 2024. And XHB was in "bullish" territory in the Power Gauge for most of that span. But as we've covered, high interest rates have been catching up with these companies. And take a look at the below chart. It shows data from the St. Louis Fed on construction of new homes... This chart gets to the core of the problem in the U.S. housing market. As you can see, homebuilding collapsed from early 2006 through early 2009. The industry basically walked away from building new homes. You'll also notice that the ramp back up took a long time. That's years of undersupply. And it's why experts say the U.S. housing market is still short by millions of units. But in 2020, the pandemic was a major disruption... Interest rates had dropped to historic lows. That made buying a lot easier for consumers. But prices soared as folks competed for limited supply. Then, starting in 2022, the Fed began raising interest rates. The central bank wanted to slow the then-soaring inflation that consumers were facing. But higher rates also made home loans considerably more expensive. Now, homebuilders are in a sticky situation. Plenty of folks want to buy homes. But prices – and loan payments – are simply too high for them. This leaves homebuilders with limited options. Tough Choices for Homebuilders They can build cheaper homes... or they can cut prices on existing projects. Both options aren't great for homebuilders. Cutting prices on existing projects means taking a loss. And that leads to decreased earnings. Building cheaper homes, generally speaking, compresses margins. This also leads to decreased earnings. Knowing this, it's easy to see why homebuilders went from Power Gauge superstar to one of the worst-rated subsectors. And as long as rates remain high, I wouldn't expect things to get better in this space. Good investing, Vic Lederman Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.54% 5 19 6 S&P 500 +0.57% 90 271 138 Nasdaq +0.78% 24 59 17 Small Caps +1.61% 441 1029 413 Bonds -0.18% Information Technology +1.5% 21 43 5 — According to the Chaikin Power Bar, Small Cap stocks have become somewhat more Bullish than Large Cap stocks. Major indexes are mixed. *  *  *  * Sector Tracker Sector movement over the last 5 days Information Technology +1.83% Energy +1.06% Utilities +0.89% Real Estate +0.8% Health Care +0.66% Materials +0.62% Consumer Staples +0.56% Industrials +0.3% Financial +0.29% Communication -0.21% Consumer Discretionary -0.66% *  *  *  * Industry Focus Homebuilders Services 1 19 15 Over the past 6 months, the Homebuilders subsector (XHB) has underperformed the S&P 500 by -21.27%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved up 1 slot over the past week. Indicative Stocks BLD TopBuild Corp. WSM Williams-Sonoma, Inc CSL Carlisle Companies I *  *  *  * Top Movers Gainers DG +15.85% ON +11.35% FSLR +6.5% MCHP +6.4% DLTR +6.01% Losers KVUE -6.17% FDS -4.83% CME -2.89% BG -2.68% MAA -2.09% *  *  *  * Earnings Report Earnings Surprises GWRE Guidewire Software, Inc. Q3 $0.88 Beat by $0.41 FERG Ferguson Enterprises Inc. Q3 $2.50 Beat by $0.48 DG Dollar General Corporation Q1 $1.78 Beat by $0.29 HPE Hewlett Packard Enterprise Company Q2 $0.38 Beat by $0.05 CRWD CrowdStrike Holdings, Inc. Q1 $0.73 Beat by $0.07 *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at STEVENMAGALLANES520.NIMS@BLOGGER.COM. 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