Companies Move to Refinance Sooner: 'Better Off to Lock It In' — WSJ

By Paul R. La Monica

Home was not where the heart was for investors this year. That could change in 2026.

Housing stocks have stagnated due to concerns about high mortgage rates, tariffs lifting construction costs, and out-of-reach home prices. As a result, two top housing-related exchange-traded funds have missed out on this year's market rally. The iShares U.S. Home Construction exchange-traded fund is down about 0.6% this year, while the State Street SPDR S&P Homebuilders ETF is up just 4.3%.

But investors — and some industry executives — are growing more hopeful about 2026. Builder stocks rallied after the Federal Reserve lowered interest rates on Dec. 10, its third rate cut since September. Mortgage rates, which have already fallen from a peak of about 7% for a 30-year fixed home loan in January down to 6.2% by mid-December, could head even lower. Economists at real estate information firm Redfin added in a recent report that 2026 should be the start of what it calls the Great Housing Reset, "a years-long period of gradual increases in home sales and normalization of prices."

Two prominent builders, Lennar and KB Home, will report their latest earnings this coming week. Investors are hoping the companies are a little more upbeat about next year, especially after recent results from builders Hovnanian Enterprises and Toll Brothers put pressure on the sector earlier this month. Still, even though the current results were far from phenomenal, the tone of their CEOs was cautiously optimistic.

Hovnanian CEO Ara Hovnanian said that "buyers are definitely out there looking" but they are "hesitating at the moment" due to economic uncertainty. "That will eventually pass," he continued. And Toll Brothers CEO Douglas Yearley admitted that his company was being conservative with its outlook even though there are reasons for encouragement, particularly due to lower mortgage rates. "We also recognize that the underlying fundamentals that fuel housing demand in the long term have not changed," he said, noting that demographics are favorable and housing supplies are tight. "All of these trends support demand for new homes."

A 2026 housing uptick doesn't look priced into the builder stocks. The iShares ETF is trading for just 14 times earnings estimates for 2026. KB Home, Toll Brothers, and DR Horton are even cheaper, with forward price/earnings ratios in the high-single-digits to low-double-digits range.

Darius Dale, founder and CEO of 42 Macro, an investment research firm, is bullish on the builders. He thinks that politicians in Washington will do all they can in a midterm election year to try to boost housing demand. "The administration may throw the kitchen sink at the market to try and fix housing," he said. "That favors builder stocks, building suppliers, and retailers like Home Depot and Lowe's."

Nancy Tengler, CEO of Laffer Tengler Investments, agreed. "We can see regulatory relief from Washington. Whether it is through first-time buyer tax credits or additional incentives to home builders to increase supply, we believe the housing-related stocks will start to reflect expected improvement in the environment," she wrote in a report, adding that DR Horton is one of her favorite stocks for 2026.

As Redfin notes, the housing recovery will take time. But the worst may be over. And that's something to build on.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Everything points to Meta Platforms needing another name change. The social-media company is cutting spending on the 'Metaverse' and directing funds toward wearable devices, which could mean Meta goes head-to-head with Apple in the next stage of the artificial-intelligence trade.

It looks like an admission of defeat in Meta CEO Mark Zuckerberg's bet on virtual worlds. The cost has been $77 billion in operating losses in the Reality Labs division since 2020. Perhaps that's why investors cheered the reported move that Meta's cutting the department's budget, pushing the stock up more than 3%.

The money saved on the Metaverse is instead being pumped into AI. With Meta losing out in the chatbot race to rivals such as ChatGPT developer OpenAI and Google, Zuckerberg and Co. are focused on trying to extend their lead in AI-powered wearables, where Meta has a hit with its Ray-Ban branded smart glasses. The move makes some sense — whereas making AI models is a costly race where it is hard to maintain a lead against rivals, hardware success could prove more durable.

That should ring alarm bells at Apple. The iPhone maker has stayed out of the AI spending race so far, to the benefit of the stock, which hit an all-time high this past week. But rivals are hoping new technology might disrupt the dominance of the smartphone. Google is planning a renewed push into smart glasses, while OpenAI is working on a mysterious AI device with ex-Apple designer Jony Ive.

Apple isn't blind to the threat. It has its own plans for smart glasses, set to be unveiled next year, according to Bloomberg. But it is losing a string of engineers and designers to high-paying rivals, while its Vision Pro product — a full virtual-reality headset as opposed to lightweight glasses — looks to have been a dud.

So in terms of monikers will it be MetAI Platforms? It's probably too early to start picking out new names, but the next stage of the AI race is taking shape and it's happening in the real world.

• Adam Clark

*** What's Ahead for Markets in 2026? From "Liberation Day" tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us on Dec. 11 at noon for discussions with investment strategists and money managers about the outlook for the economy and markets in 2026 — and how to position your portfolio for success. Sign up here.

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Kevin Hassett Increasingly Eyed as Trump's Next Fed Chair

Nearly all signs point to White House economic advisor Kevin Hassett as the person President Donald Trump will pick to become the next chairman of the Federal Reserve. Attention on Wall Street and in the Beltway has already shifted to how Hassett, often seen as Trump's loyalist economist, would guide monetary policy.

• Hassett's potential appointment is viewed more favorably than if other contenders were the front-runners, some analysts say. He could, for example, extend Fed rate cuts even more, wrote Thierry Wizman at Macquarie Group. Prediction site Kalshi puts his chances of being nominated at 72%.
• Trump has publicly criticized Jerome Powell, whom he nominated in his first term, for holding interest rates too high and moving too slowly. Hassett, currently director of the National Economic Council, has defended tariffs, described inflation as a manageable problem, and supported faster rate cuts.
• Trump has sought a majority on the Fed's seven-member board of governors which means he could influence monetary policy. His attempt to fire Gov. Lisa Cook was halted by the Supreme Court pending a January hearing. Elevating Hassett will draw questions, especially from foreign central banks and global investors.
• Critics point to episodes that raise doubts about Hassett's judgment. Hassett's 1999 book Dow 36,000 projected that equity valuations would rise sharply, but they instead collapsed in the dot-com bust. He also circulated estimates suggesting Covid-19 fatalities would drop to zero by mid-May 2020.

What's Next: Powell's final months as Fed chair could be overshadowed by the presence of a successor who will shape expectations before taking office. Powell, whose term as chair ends in May, has spent the past several years defending the institution's credibility, insisting that decisions rest on data rather than political preference.

• Nicole Goodkind and Janet H. Cho

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Comcast's Cable Spinoff Versant Could Be Valued at $10 Billion

Versant Media Group, the cable networks spinoff from Comcast that includes CNBC and MS NOW (formerly MSNBC), faces independence in a tough advertising market and as households continue to abandon traditional cable. But 2025 financial projections suggest a market value of about $10 billion when it starts trading.

• CEO Mark Lazarus highlighted Versant's strengths on Thursday. Analysts have talked about a multiple of around six or seven off current-year earnings before interest, taxes, depreciation and amortization (Ebitda), a common media financial measure. That would be a discount to Walt Disney and Paramount.
• In a presentation, Lazarus projected that Versant will generate $6.6 billion of revenue, $2.2 billion of Ebitda, and $1.4 billion of free cash flow this year. Revenue would be down 6% this year based on those projections. Ebitda would also be lower than a year ago.
• Taking Versant's share count and pro forma debt, it would translate into a market value of about $10 billion and a share price of around $70, Barron's estimates. Versant will begin when-issued trading around Dec. 15 and then regular trading on the Nasdaq under the ticker VSNT on Jan. 5, 2026.
• There will be 144 million shares outstanding with Comcast distributing one share of Versant for each 25 Comcast shares. Versant should have about $3 billion of debt outstanding following the spinoff and will borrow that money to help make a $2.25 billion payment to Comcast, which is parent to NBCUniversal.

What's Next: Comcast also is bidding for Warner Bros. Discovery but is considered a long shot to win the contest, where Paramount Skydance and Netflix are seen as the leaders and the top choice of bettors on Polymarkets. If Comcast wins, it could combine Warner with NBCUniversal.

• Andrew Bary

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This Home Builder's Earnings Report Sank the Sector

New Jersey-based home builder Hovnanian Enterprises posted what some could see as a bad sign for the housing market writ large: Its quarter was so challenging its shares sank by double-digits, dragging other housing stocks down with them. The exchange-traded fund tracking home builders fell 1.8%.

• Hovnanian posted a loss of 51 cents a share in the fourth quarter, a contrast to the $12.79 a share earnings in the same period a year ago. It fell well short of expectations largely because of land charges and refinancing expenses that weighed on profits.
• Hovnanian's revenue of $817.9 million was slightly above Wall Street expectations but marked a notable decline from $979.6 million a year ago. Rising mortgage rates and affordability constraints have led to weaker demand for new homes.
• Hovnanian's consolidated fourth quarter contracts fell 10.8% to 1,209 homes compared with 1,355 homes in the same quarter last year. The firm is a cyclically sensitive builder and carries more debt than many rivals. It tends to see larger swings in earnings during housing booms and busts.
• Home prices nationally will rise modestly in 2026, according to two new forecasts. Redfin expects that home prices will rise 1% next year, while Realtor.com forecasts a 2.2% gain. In either case, home prices will grow slower than wages, improving the math for many households.

What's Next: Both forecasters expect mortgage rates to average 6.3% next year. As home affordability improves slightly, so will sales, they say. Redfin expects a 3% lift in sales to 4.2 million, while Realtor.com calls for a 1.7% increase.

• Evie Liu and Shaina Mishkin

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World's Billionaires Less Interested in Investing in North America

The world gained 287 new billionaires this year, collectively worth $684.2 billion. But they're less keen on investing in North America than they used to be, citing policy uncertainty, high stock valuations, inflation, and how the U.S. engages the world, UBS's 11th annual Billionaire Ambitions Report said.

• Of billionaires surveyed, 63% said North America offers the greatest opportunity for returns, in the next 12 months, down from 80% who said that a year ago. Billionaires are diversifying to China and Western Europe, said Dan Scansaroli, UBS's co-head of investment management, Americas.
• UBS said 40% of billionaires view Western Europe as offering the greatest opportunity for returns, up from 18% a year ago, while 34% cite Greater China, and 33% cite the rest of Asia-Pacific, up from 11% and 25%, respectively, a year earlier.
• Billionaires find China's accommodative monetary and fiscal policies, coupled with approximately 30% lower valuations, appealing, Scansaroli said. They view China's centrally managed goal of achieving technical superiority, including through AI innovations like DeepSeek, as a way to capture outsize returns following the rally in U.S. tech stocks.
• The report, which draws from a UBS/PwC billionaire database, found that the world's billionaire ranks rose nearly 9% through April 4, to 2,919. Their combined wealth rose 13% to nearly $15.8 trillion, from just under $14 trillion a year earlier.

By Evie Liu

New Jersey-based home builder Hovnanian Enterprises had a bad quarter that caused its shares to plunge by double-digits — and dragged down other housing stocks.

Shares fell 23% on Thursday, and concerns about its report spilled over to other home builder stocks as well. D.R. Horton fell by 2.6%, Lennar dropped 4.8%, PulteGroup lost 1.9%, Toll Brothers slipped 1.2%, and KB Home tumbled 2.5%. The State Street SPDR S&P Homebuilders exchange-traded fund closed 1.8% lower.

The company posted a loss of 51 cents per share in the fourth quarter, a contrast to the $12.79 per-share earnings in the same period a year ago. Analysts polled by FactSet expected a gain of 63 cents. Land charges and refinancing expenses have weighed on profits, according to the firm.

Hovnanian's revenue of $817.9 million was slightly above Wall Street expectations but marked a notable decline from $979.6 million a year ago.

Rising mortgage rates and affordability constraints have led to weaker demand for new homes. Hovnanian's consolidated contracts in the fourth quarter decreased by 10.8% to 1,209 homes compared with 1,355 homes in the same quarter last year.

Hovnanian is a cyclically sensitive builder. It carries more debt than many rivals and therefore tends to see larger swings in earnings during housing booms and busts.

In an uncertain economic environment, investors tend to punish companies when the outlook appears challenged, especially in a capital-intensive, interest-rate-sensitive sector like homebuilding.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Revenue for fiscal 2025 was $2.98 billion, with net income dropping to $63.9 million and EPS (diluted) to $7.43. Homebuilding gross margin fell to 12.7% due to increased incentives, while active selling communities rose to 140. Liquidity remained strong at $404.1 million.

Original document: Hovnanian Enterprises, Inc. [HOV] SEC 10-K Annual Report — Dec. 4 2025