US existing-home sales fell in October to their lowest since 2010, as mortgage rates near 7% kept buyers away. Fewer purchases mean fewer people moving and furnishing homes, which could cut furniture sales at Williams-Sonoma and project spending at Lowe's. Nothing in the last month argued against this, though owners who cannot sell may remodel instead, which comparable sales at or above last quarter's 6.2% and 0.2% would show.
Updated Nov 13
Home Improvement Retail, Specialty Retail
The reasoning of the connection that opened this thesis. It is not updated.
When mortgage rates rose sharply in 2022 and 2023, existing-home sales fell sharply. Lenders and title insurers saw volumes drop, and home-improvement retailers saw weaker demand for big-ticket items.
Homeowners locked in by high rates may choose to improve the house they already have rather than move. That could keep spending at Lowe's steady, and high home prices give owners more equity to borrow against for projects.
3 for · 0 against
The 30-year mortgage rate averaged 7.33% in October, up from 6.86% in September and the highest since 2000 apart from one month in 2023. That makes the monthly payment on a new home much bigger. Prices are still high too, so many would-be buyers simply stopped shopping. That's why so few previously owned homes changed hands in October.
Every home sale usually means a household packs up and moves. A new place rarely fits the old furniture, and buyers tend to fix and repaint before or soon after moving in. So fewer sales mean fewer families doing that burst of spending.
Furniture sellers like Williams-Sonoma and the do-it-yourself store Lowe's depend partly on that move-in spending. It works like a wedding season for caterers: fewer weddings, fewer big orders. That's why their sales could slow, though how much is not yet known.
Average move since Tenji added each name: -0.8% · S&P 500 since the thesis opened Nov 12: -0.4% · 0 of 2 names moving with the thesis
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