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Earnings season is here again, and, finally, the vibes aren’t terrible.
After more than two years of high mortgage rates and low inventory, the real estate industry is currently basking in the prospect of rate cuts and a healthier spring buying season.
At the same time, major companies are about to share what they earned in the final quarter of 2023. To understand how to make sense of it all, Intel reached out to Wall Street analysts who specialize in real estate.
The tone of these conversations was generally one of cautious optimism. Though 2023 was rough, most investors appear to be focused on the future, rather than on the actual Q4 numbers. And while there’s still plenty of uncertainty, the consensus seems to be that there’s a good chance the hardest times are now in the past.
A forward-looking earnings season
Everyone who spoke with Intel for this story generally agreed that the future outlook is more important than the past. Why? Because the fourth quarter of 2023 saw mortgage rates hit their highest point in decades, meaning those final three months of the year were uniquely punishing for real estate companies. However, rates have since retreated — meaning Q4 2023 conditions have already changed and are not expected to return.
“You’re reporting on an environment that has changed a lot,” John Campbell, a managing director at Stephens, told Intel. “So you want to look at the results, but, more so than usual, it’s all about the outlook.”
- The average 30-year, fixed-rate mortgage peaked on Oct. 26 at 7.809 percent, according to Optimal Blue.
- Rates have since fallen considerably, with the average landing at 6.723 percent as of Monday.
The chart below highlights what happened in recent months, with a notable drop-off…