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Want the biggest understated fundamental news coming out of year-end 2023?
It may be the rise in the number of active USA Houses for Sale.
With the benchmark 30-year fixed mortgage rates back down to 7.0% at year’s end, the rise in Month’s Supply at Current Sales Rates rose to 11.3 months.
When the prior month of November 2023 was near 7 months of supply, and the median is 5.8? That is a significant build.
This happened, as the housing mortgage finance rates fell, along with a lower benchmark 10-year U.S. Treasury yield.
Now, consider the following U.S. housing market updates, as a group:
New Single-Family Home Sales at 629K in December are at the 629K median.
Median Sales Price of Houses Sold are down sharply at -7.91%.
Houses for Sale – Months’ Supply at Current Sales Rate was 11.3 months in December. The median is 5.8 months.
New Privately-Owned Housing Units built at 1460K, above median at 1354K.
U.S. Housing Dashboard (1960 to Dec. 2023)
Image Source: Zacks Investment Research
Financial market professionals were already feeling more positive, that U.S. home inventory levels would improve in 2024: The National Association of Homebuilders had a forecast for a +5.0% increase in U.S. homebuilding starts next year.
The Zacks JAN 2024 Sector/Industry/Company Telescope
Late DEC Zacks Industry Ranks were led by decidedly defensive sectors.
Why? I might take these stale Zacks Industry rankings with a grain of salt, though. Q4-23 earnings reports will bring earnings estimate revisions, en masse, to the Zacks Industry Rank statistics.
Prior to that set of shifts, a number of S&P500 sectors did move up in late DECEMBER.
The two Very Attractive top sector in DEC were, surprisingly, Industrials and Utilities.
At Attractive was Info Tech, Communication Services and Consumer Staples.
At Market Weight was Energy, Health Care, Financials and Communication Discretionary.
There were no Unattractive or Very Unattractive sectors this month.
(1) Industrials ramped up to Very Attractive from Unattractive. Business Products, Machinery, & Conglomerates and Industrial Products & Services were strong.
(3) Info Tech stayed at Attractive. Software Services led and the Semis fell a touch.
Zacks #1 Rank (STRONG BUY): Splunk
(4) Communications Services rose to Attractive from Market Weight.
(5) Consumer Staples rose to Attractive from Unattractive. Soap & Cosmetics and Beverages looked best.
(6) Energy stayed Market Weight. Oil/Gas Pipelines and Coal look best.
(7) Health Care stayed Market Weight. Drugs led again.
(8) Financials stayed Market Weight. Insurance looked great again. But no others here.
(9) Consumer Discretionary rose to Market Weight from Very Unattractive. Non-food Retail and Leisure Services stayed strong.
(10) Materials fell rose to Market Weight from Very Unattractive. Building Products was the clear leader here.
Conclusion
Am I worried about the U.S. housing market now? No.
Am I going to pay more attention to it? Yes. A touch.
Looking ahead, though, the mass arrival of S&P500 Q4-2023 earnings reports will surely re-set our understanding of these latest Zacks sector rankings.
And that will provide even more color about the underlying shifts taking place across the U.S. economy, not just the many regional and metro housing markets.
I would await those earnings results, and the refreshed executive outlooks on 2024, before making any decisions of consequence with stock investing.
Nonetheless, enjoy the rest of my JAN 2024 market strategy report.
Happy trading and investing!
John Blank Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
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Homes for Sale Rise: Zacks JAN 2024 Market Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full Jan Market Strategy report To access the full PDF, click here.
Introduction
Want the biggest understated fundamental news coming out of year-end 2023?
It may be the rise in the number of active USA Houses for Sale.
With the benchmark 30-year fixed mortgage rates back down to 7.0% at year’s end, the rise in Month’s Supply at Current Sales Rates rose to 11.3 months.
When the prior month of November 2023 was near 7 months of supply, and the median is 5.8? That is a significant build.
This happened, as the housing mortgage finance rates fell, along with a lower benchmark 10-year U.S. Treasury yield.
Now, consider the following U.S. housing market updates, as a group:
U.S. Housing Dashboard (1960 to Dec. 2023)
Image Source: Zacks Investment Research
Financial market professionals were already feeling more positive, that U.S. home inventory levels would improve in 2024: The National Association of Homebuilders had a forecast for a +5.0% increase in U.S. homebuilding starts next year.
The Zacks JAN 2024 Sector/Industry/Company Telescope
Late DEC Zacks Industry Ranks were led by decidedly defensive sectors.
Why? I might take these stale Zacks Industry rankings with a grain of salt, though. Q4-23 earnings reports will bring earnings estimate revisions, en masse, to the Zacks Industry Rank statistics.
Prior to that set of shifts, a number of S&P500 sectors did move up in late DECEMBER.
The two Very Attractive top sector in DEC were, surprisingly, Industrials and Utilities.
At Attractive was Info Tech, Communication Services and Consumer Staples.
At Market Weight was Energy, Health Care, Financials and Communication Discretionary.
There were no Unattractive or Very Unattractive sectors this month.
(1) Industrials ramped up to Very Attractive from Unattractive. Business Products, Machinery, & Conglomerates and Industrial Products & Services were strong.
Zacks #1 Rank (STRONG BUY): Siemens (SIEGY - Free Report)
(2) Utilities rose to Very Attractive from Market Weight. Telephones, Gas Distribution and Water Supply looked great, with winter in full swing.
Zacks #1 Rank (STRONG BUY): RWE AG (RWEOY - Free Report)
(3) Info Tech stayed at Attractive. Software Services led and the Semis fell a touch.
Zacks #1 Rank (STRONG BUY): Splunk
(4) Communications Services rose to Attractive from Market Weight.
(5) Consumer Staples rose to Attractive from Unattractive. Soap & Cosmetics and Beverages looked best.
(6) Energy stayed Market Weight. Oil/Gas Pipelines and Coal look best.
(7) Health Care stayed Market Weight. Drugs led again.
(8) Financials stayed Market Weight. Insurance looked great again. But no others here.
(9) Consumer Discretionary rose to Market Weight from Very Unattractive. Non-food Retail and Leisure Services stayed strong.
(10) Materials fell rose to Market Weight from Very Unattractive. Building Products was the clear leader here.
Conclusion
Am I worried about the U.S. housing market now? No.
Am I going to pay more attention to it? Yes. A touch.
Looking ahead, though, the mass arrival of S&P500 Q4-2023 earnings reports will surely re-set our understanding of these latest Zacks sector rankings.
And that will provide even more color about the underlying shifts taking place across the U.S. economy, not just the many regional and metro housing markets.
I would await those earnings results, and the refreshed executive outlooks on 2024, before making any decisions of consequence with stock investing.
Nonetheless, enjoy the rest of my JAN 2024 market strategy report.
Happy trading and investing!
John Blank
Zacks Chief Equity Strategist and Economist