Yahoo Finance Live's Seana Smith and Dave Briggs examine KB Home's stock ahead of its earnings report tomorrow amid economic pressures being felt in the housing market, home prices, and inventory.
SEANA SMITH: Well, here is my stock to watch for tomorrow. And that is KB Home. Now the home builder is reporting earnings after the close amid recent signs of weakness in the housing market. It follows results from Lennar this morning, who reported better than expected second quarter earnings. But it warned that inflation and rising mortgage rates have buyers rethinking their purchases. Now Lennar maintained its outlook for home deliveries, but the company said that any forecast would amount to, quote, "guessing."
Homebuilder stocks took a hit last week after two real estate firms, Redfin and Compass, announced job cuts. And Dave, we're really starting to see this area of the economy begin to soften a bit. We also got that existing housing sales number out this morning, pulling back here for just about the fourth month in a row.
DAVE BRIGGS: Yeah, down 3.4%, which is the lowest level in two years, really since the pandemic really impacted the housing market. But it's really just a tough spot for buyers because, yes, you're seeing some softening, to use your word, but the prices are going to remain high because the inventory is just so low. And those who are on the sidelines got some more bad news today because the rental market is brutal. It's unapproachable and up 14% year over year. And in Miami, 40.8% increases in single family rentals year over year. That's a devastating number, pricing out so many Americans.
SEANA SMITH: Yeah, so many people are getting priced out of the market. And when we take a look at the homebuyer's market, a lot of times, it's those first-time homebuyers. When you take a look at that rising cost of the house, higher mortgage rates, they're simply not able to afford it. Supply, we're still seeing a massive shortage on that and pushing the prices higher. It's going to be a while until we see some of these first-time homebuyers being able to enter the market.
DAVE BRIGGS: It is a really tough spot they're in.