"Even Buffett Accumulated... Has the US Housing Market Bottomed Out?"

In the U.S. housing market, buying sentiment is reviving mainly around new homes, raising expectations for a market rebound. Berkshire Hathaway, led by Warren Buffett, recently accumulated shares of homebuilders, reinforcing the theory that the U.S. housing market has bottomed out.

Home Depot, the largest building materials retailer in the U.S., announced on the 15th (local time) that its second-quarter sales were $42.916 billion, a 2.0% decrease compared to the same period last year. Earnings per share ($4.65) also fell 7.9% year-over-year. However, both sales ($42.23 billion) and earnings per share ($4.45) slightly exceeded market expectations.

The decline in Home Depot’s performance is due to Americans cutting discretionary spending on home renovations and interior improvements. CNN reported, "The drop in Home Depot’s sales, considered a barometer of the U.S. housing market, reflects the continued weakness in the existing home sales market," citing high home prices and rising mortgage rates as the underlying reasons.

According to the government-backed mortgage company Freddie Mac, the 30-year fixed mortgage rate averaged 6.96% last week, nearly reaching 7%. This is higher than both the same period last year (5.51%) and the previous week (6.81%), marking a three-week consecutive rise. The sharp increase in mortgage rates has suppressed demand for selling old homes and buying new ones, prolonging the weakness in the existing home sales market. According to the National Association of Realtors (NAR), existing home sales in June fell 3.3% from the previous month to 4.16 million units.

Housing indicators are also fluctuating amid lowered expectations. The National Association of Home Builders (NAHB) Housing Market Index (HMI), a leading and sentiment indicator of the U.S. housing market, recorded 50 in August. The NAHB HMI surveys homebuilders monthly about market conditions and is considered a leading indicator of future home sales. After hitting a low of 31 in December last year, the index rose monthly until January but turned downward this year due to the increased burden of mortgage rates.

However, new home indicators are showing signs of a rebound. The U.S. Department of Commerce reported that housing starts in the second quarter averaged 1.45 million units, up from 1.39 million units in the previous quarter. This quarterly increase in housing starts is the first since early last year. As concerns about tightening gradually ease and the U.S. economy shows a stronger-than-expected recovery, expectations are growing that the housing market will revive, centered on new homes.

Warren Buffett. [Photo by AP News]

The same interpretation applies to Buffett’s accumulation of homebuilder stocks. Berkshire Hathaway, led by Buffett, disclosed in a securities filing the previous day that it purchased 5.97 million shares ($726 million) of homebuilder DR Horton. It also acquired shares of NVR (11,112 shares) and Lennar (153,000 shares) worth approximately $70 million and $17.2 million, respectively.

Foreign media focused on the fact that Buffett continued to accumulate homebuilder stocks despite losses recorded in the second quarter by paint company Benjamin Moore and mobile home manufacturer Clayton Homes, which he owns. CNN explained, "With demand still strong and existing homes not coming onto the market, new home sales are showing strength," interpreting Buffett’s bet on homebuilders as being for the same reason.

This content was produced with the assistance of AI translation services.