It's a rough housing market, and Goldman Sachs expects it to get worse
Goldman Sachs has painted a bleak picture for the housing market, noting that conditions have stagnated for three years amid elevated mortgage rates exceeding 7%. Their expectation of worsening performance highlights risks for economic growth and consumer confidence, potentially extending the downturn in the housing sector. This forecast may weigh on the USD as market participants assess broader economic implications, especially if homebuilder sentiment continues to decline.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). Marketwatch's view aligns closely with the upper third, with JPMorgan also reflecting a similar perspective in their outlook.
How firms align
JPMorgan's target of 1.10 supports the view that economic conditions may worsen, aligning with Goldman Sachs' negative forecast. Conversely, BofA's target of 1.04 suggests a more pessimistic approach, indicating potential risks for the USD that diverge from the broader consensus found in /reports/jpmorgan and /reports/bofa.
What the data shows
Recent adjustments to forecast data suggest a tightening in the housing market, corroborating Goldman's cautionary stance. More details can be found in /research/housingmarketinsight.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Goldman Sachs warns of worsening conditions in the housing market, with implications for economic sentiment.
- 02FX traders should monitor the USD closely as housing data could influence positioning.
- 03Bearish sentiment could push EUR/USD towards support levels around 1.075 amidst economic uncertainty.
Market implications
Traders should watch the next housing data releases, especially construction starts and sales figures, as they could signal further weaknesses. Our consensus target of 1.075 may come under scrutiny if bearish trends persist.
Risks to this view
A sudden easing of mortgage rates or unexpected policy adjustments by central banks could reverse the current bearish sentiment. If housing starts show signs of recovery, it may shift the outlook more favorably for the USD.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Firms mentioned
Sources & References
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