But it’s not the only sector to take a beating.
“It was an insane year,” Matt Holm, an agent with Compass in Austin, Texas, recently told my CNN Business colleague Anna Bahney.
He recalled a smaller five-year-old home that he put on the market last January for $425,000, already higher than listings for comparable properties. Interest was overwhelming.
“I stopped counting at 35 offers,” he said. The home sold for $545,000, a 30% increase over the list price.
Shares of Toll Brothers rallied almost 67% in 2021, compared to a 27% jump in the S&P 500. Lennar gained 52%, and PulteGroup climbed 33%.
But the prospect of interest rate hikes, which serve as a crucial benchmark for mortgages, is shaking things up.
The Federal Reserve has indicated that the era of rock-bottom rates will end soon given the need to fight inflation and signs the economy is getting back to normal. Jobs data published Friday firmed up expectations on this front.
“With an unemployment rate below 4% and pay pressure building, the Fed looks set to respond swiftly,” ING’s chief international economist James Knightley told clients.
In a note published late Sunday, Goldman Sachs said it now expects the Fed to hike interest rates four times this year starting in March. It had previously penciled in three increases.
That could be good news for would-be buyers that have been edged out by affordability concerns — but lead to a weaker year for companies like Toll Brothers and Lennar that have been riding the wave.
Could taxes on Big Oil rise alongside energy costs?
That’s a question the UK government is under mounting pressure to answer as British households cope with skyrocketing bills, my CNN Business colleague Charles Riley reports.
The main opposition Labour Party this weekend called on Prime Minister Boris Johnson to impose a windfall tax on companies pumping oil and gas from the North Sea, saying that the money raised could be used to cut £200 ($272) from soaring household bills.
The party reportedly says the rate of corporate tax the companies pay should be increased by 10 percentage points for a year. That would also allow the government to increase energy subsidies for the poorest households.
Big picture: British consumers will pay roughly $1,075 more to heat and light their homes this year, according to Bank of America, following a dramatic surge in wholesale energy prices that has caused dozens of UK energy suppliers to collapse in recent months.
Wholesale European gas prices have jumped by 400% over the previous year and electricity prices have increased by 300%, according to Bank of America. The increases have been driven by cold weather, nuclear plant outages in France and reduced gas flow from Russia.
BP and Shell both operate in the North Sea, and have benefited from rising gas and oil prices. BP CEO Bernard Looney told the Financial Times in November that surging commodity prices had turned the company into a “cash machine.” The company posted profits of $3.3 billion in the third quarter of 2021, and said it planned to return an extra $1.25 billion to shareholders.
The rebuttal: Industry group OGUK, which represents UK offshore producers including Shell and BP, said last week that a windfall tax would make energy companies less likely to invest in the country, causing “irreparable damage to the industry” that would “leave consumers even more exposed to global shortages.”
Why Nike and Ralph Lauren items are getting tougher to find
You’re likely to have better luck these days snagging them from their own stores or on their websites than at smaller chains.
Instead, they’re focusing their efforts on getting customers to buy directly from their own channels as well as a narrow group of wholesale partners.
The strategy: Selling to customers directly allows brands to make more money, control their prices and showcase products exactly the way they want in store displays. They also can prevent their labels from being discounted too heavily, which could weaken their brand image and pricing power.
But the shift means shoppers will have fewer places to buy some of their favorite products. It also puts pressure on retailers that will no longer be able to stock highly-sought after shoes and clothing items.
Under Armour and Ralph Lauren have pulled back on sending merchandise to discount stores like T.J. Maxx, while Nike is halting new shipments to shoe warehouse DSW.
Up next
Coming up: All eyes are on the latest data on US consumer prices due Wednesday.
