The 30-year fixed mortgage rate sits near 7.40 percent, and the housing market is feeling it. Existing home sales ran at a 3.99 million annualized pace in September. Housing starts fell 5.2 percent. The bottom line: fewer people can afford to buy, and many who own a home will not give up a cheaper loan to move.
Goldman sees a long slog
Goldman Sachs analyst Ronnie Walker expects affordability to weigh on the market in 2027, made worse by the recent rebound in mortgage rates. “Sustained higher mortgage rates will continue to have their most pronounced impact on housing turnover,” he said. More than 95 percent of borrowers hold rates below today’s, and 65 percent are at least 2 percentage points below. That is a strong reason to stay put. Walker projects 3.9 million existing home sales in 2027, 26 percent under 2019 and a bit short of his 4 million estimate for 2026. “We expect housing demand to remain tepid,” he added.
Young buyers carry the heaviest load. A recent Pew Research Center survey found about 9 in 10 adults under 40 say buying is harder now than it was for their parents. From 2019 to 2024, inflation-adjusted median home value climbed 30 percent while inflation-adjusted median income for households headed by someone under 40 rose just 9 percent.
Meredith Whitney, CEO of Meredith Whitney Advisory Group, pointed to one workaround on Sozzi Unleashed: buying in blighted areas and rehabilitating homes. Detroit, she said, is “the perfect example,” where investment and an economic revival let buyers get homes at a massive discount to more established neighborhoods.
Rocket reports October 29
Rocket Companies is due to report third-quarter results on October 29, 2026. The stock is down 39.41 percent this year, though it rose 8.81 percent last week. Over twelve months it is off 33.39 percent. The Q3 EPS consensus has fallen about 28 percent in three months, from $0.19.
Last quarter, adjusted EPS of $0.16 missed the $0.1644 consensus, and revenue of $2.784 billion fell short of the $2.831 billion expected, ending a four-quarter run of EPS beats. Management still called it the most profitable quarter in four years, with record purchase share of 6.2 percent and refinance share of 14.3 percent. Since then, conditions have worsened. CFO Brian Brown expected the third-quarter mortgage market to shrink from the second, “something the industry has not seen since 2022.” Rocket guided to Q3 adjusted revenue of $2.5 billion to $2.7 billion.
Three things to watch
First, rates. Pending home sales are near historic lows, and rate-and-term refinancing, about 30 percent of revenue, is the most exposed. Management calls the other 70 percent recurring or less rate-sensitive. Investors will note whether that cushion holds.
Second, margins. Rocket Pro’s gain-on-sale margin narrowed to 0.69 percent on Compass partnership investments, and JPMorgan and Morgan Stanley trimmed price targets over fears of further compression. In August, Brown said margins were “holding steady and even some improvements at the channel level.” The report will test that.
Third, costs. Rocket booked a $616 million negative change in mortgage servicing rights fair value last quarter. Q3 expenses include roughly $100 million of one-time acquisition costs and $110 million of intangible amortization. Strip those out, and management expects expenses to drop about $100 million from the prior quarter. The company has $11.2 billion of liquidity and is on track for $400 million in Mr. Cooper synergies by year end.
Sources
- 3 Cracks in the Housing Market Rocket Must Overcome on Oct. 29
- US housing market likely to stay bleak, Goldman Sachs warns
- 3 Cracks in the Housing Market Rocket Must Overcome on Oct. 29
Photo: Rick Obst (CC BY 2.0)
