U.S. housing activity weekly gauge remained at 4, with volume down 1% sequentially in the week of May 17

Overview

This report tracks high-frequency activity in the U.S. housing market for the week of May 17. Goldman Sachs' weekly housing activity gauge registered 4, below the historical normal reading of 5; overall activity volume declined 1% sequentially, mainly due to fewer home purchase mortgage applications and higher mortgage rates. However, several year-over-year indicators remained positive, including home purchase applications, home sales, total mortgage applications, and transaction prices.

Core views

The core view is that the U.S. housing market remains constrained in the short term by rates and affordability, and buyer hesitation persists, but the market has not deteriorated across the board. The higher-end market is performing relatively better in the current macro backdrop; in stock selection, Goldman Sachs prefers names with company-specific operating improvements, capital allocation, or structural advantages. If the operating environment for homebuilders improves, MTH and DHI may have greater upside given their entry-level housing exposure and more disciplined margin and cash deployment strategies.

Analysis framework

The report uses weekly high-frequency data to track housing market activity, including home purchase mortgage applications, 30-year fixed mortgage rates, sales volume, transaction prices, listing prices, active inventory, days on market, and the sale-to-list price ratio, and compares this week's data with the prior week, year-over-year levels, and 2019 averages or comparable weeks.

Methodology notes

• Macro and industry high-frequency indicatorsGoldman Sachs weekly housing activity gauge

  Calibrates the strength of market activity using more than 50 years of historical housing data.

  A reading of 5 represents conditions close to historical normal, 0 represents the weakest market outside the financial crisis, the mid-2000s were above 10, and the trough of the financial crisis was below 0; this week's gauge reading was 4.

• Market high-frequency trackingCross-validation of housing transaction and mortgage high-frequency data

  Uses demand, price, inventory, and financing cost indicators together to assess the housing market.

  The report combines data such as home purchase applications, 30-year fixed mortgage rates, Redfin sales and transaction prices, and Realtor.com active inventory and days on market to distinguish year-over-year resilience from sequential pressure.

• Equity evaluation disclosureGoldman Sachs Factor Profile

  Compares stocks across four attributes: Growth, Financial Returns, Multiple, and Integrated.

  This framework calculates percentiles based on Goldman Sachs analyst forecasts and normalized rankings to provide investment context for individual stocks; in this report it is mainly methodological disclosure and not a core basis for this week's housing activity conclusions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Installed Building Products Inc. (IBP)

  A Buy-rated name specifically highlighted in the report.

  Strengths

  It has company-specific initiatives and potential capital allocation factors that may create a relative advantage amid industry volatility.

  Weaknesses

  It remains affected by fluctuations in housing activity, rates, and construction demand.

  Comparison

  Compared with names that rely purely on a macro recovery, the report places greater emphasis on its company-level drivers.

  Risks

  If housing demand continues to weaken or rates remain elevated, orders and valuation may come under pressure.

• Meritage Homes Corp. (MTH)

  If the builder operating environment improves, the report believes it has significant upside.

  Strengths

  It has entry-level housing exposure and emphasizes discipline in balancing margins and cash deployment.

  Weaknesses

  It is sensitive to buyer affordability and mortgage rates.

  Comparison

  Compared with other builders, the report highlights its leverage in an improving environment.

  Risks

  Higher rates, buyer hesitation, and macro weakness may delay the realization of upside.

• D.R. Horton Inc. (DHI)

  If the builder operating environment improves, the report believes it has significant upside.

  Strengths

  Its entry-level housing exposure and more disciplined cash deployment strategy may benefit from a recovery in demand.

  Weaknesses

  It has high industry beta and is clearly affected by home purchase applications and mortgage costs.

  Comparison

  Like MTH, it is listed as a Buy-rated builder with greater leverage if the builder environment improves.

  Risks

  If home purchase applications continue to decline sequentially, sales momentum and market confidence may weaken.

• U.S. housing-related stocks

  Driven by high-frequency data on housing activity, mortgage rates, and home purchase applications.

  Strengths

  Year-over-year sales, loan applications, and transaction prices remain positive, indicating that underlying market demand has not completely disappeared.

  Weaknesses

  Activity volume is below the long-term average, home purchase applications are down sequentially, and affordability pressure remains.

  Comparison

  The higher-end market is performing relatively better in the current macro environment.

  Risks

  A renewed rise in rates, insufficient inventory recovery, lower listing prices, and macro uncertainty may pressure sector valuations.

Key data

• Goldman Sachs weekly housing activity gauge4Reading for the week of May 17, below 5, which represents historical normal.
• Housing activity index-1% sequentially, +6% year over yearThe current level is 14% below the long-term average.
• Home purchase mortgage applications-4% sequentially, +8% year over year1% above the April average and 29% above the February 2025 low.
• 30-year fixed mortgage rate6.51%Up 15bp sequentially, down 35bp year over year, and 38bp below the 52-week high.
• Total mortgage applications+19% year over yearVersus +15% year over year in the prior week; refinance volume was +35% year over year.
• ARM share of mortgage volume10%Up 80bp sequentially, versus 7% in the same period last year.
• Home sales+2% year over year, +2% sequentiallyShowing that transaction volume still has some resilience.
• Median transaction price+2% year over yearOn a Redfin basis; the report cover summary also mentions the median transaction price rose 1% sequentially.
• Active listings+1% year over yearVersus a 19% increase in the same period last year, but still 16% below the 2019 average.
• Days on market1 day fewer than the same week in 2019On a Realtor.com basis.
• Sale-to-list price ratio98.9%26bp above the comparable week in 2019.
• Median listing price-2% year over yearThis is one of the potential signs of weakness cited in the report.

Impact & implications

For investors, the housing market remains under pressure from rates, affordability, and macro uncertainty, and near-term readings may continue to fluctuate. The resilience in year-over-year indicators supports maintaining selective attention on housing-related stocks, but the sequential weakness in home purchase applications suggests demand is highly sensitive to rates. The report favors names with company-specific catalysts, capital allocation potential, or entry-level housing exposure, rather than simply betting on a broad industry recovery.

Risks

• The 30-year fixed mortgage rate has risen back above 6.5%, weighing on home affordability.
• Home purchase mortgage applications declined sequentially, showing demand is sensitive to rising rates.
• The economic backdrop and buyer hesitation may cause short-term transactions to remain volatile.
• The year-over-year decline in median listing price suggests seller pricing or underlying demand may still be under pressure.
• If housing activity improves less than expected, the upside thesis for homebuilders and housing-related stocks may be delayed.

What to watch

• Whether the 30-year fixed mortgage rate declines and drives a recovery in home purchase applications.
• Whether the sequential change in home purchase mortgage applications shifts from short-term volatility to a trend improvement or deterioration.
• Year-over-year and sequential changes in Redfin sales volume and median transaction prices.
• Whether Realtor.com active inventory and days on market continue moving closer to normal 2019 levels.
• Whether homebuilder orders, margins, and cash deployment strategies improve.
• Whether Buy-rated names such as IBP, MTH, and DHI see company-specific catalysts or capital allocation progress.