CICC: US Housing Valuation Re-Rating Still Awaits Fundamental Catalysts
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CICC reviews August 2026 US housing data, finding that new home sales improved month over month but remained on a year-over-year downward trend, while the existing home market stayed soft—evidence that demand recovery lacks momentum. New home sales were bolstered by price concessions, with the median new home price down year over year, whereas the median existing home price rose; inventory pressure persists and the rebound in housing starts may not be sustained as builders keep pacing construction. Builder profitability remained under pressure in FY3Q26 (Toll Brothers results declined), constrained by high financing costs and weak end demand. The 30-year fixed mortgage rate held at 6.66%, weighing on homebuilders, and the builder confidence index fell from 35 in August. With the market cautious on builders' earnings recovery, sector valuation re-rating awaits clear fundamental catalysts. CICC suggests monitoring leading builders' sales orders and gross margins. Key risks: weaker US macro fundamentals and further increases in mortgage rates. Charts track regional sales, the share of outstanding mortgages below 4%, affordability, and leading builders' P/B, P/E, and valuation percentiles.
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