Changes In The Housing Market… And Fears After Netflix Earnings 7/22/25

0:01Live from the NASDAQ market site in the heart of New York City's Times Square, this is Fast Money. Here's what's on tap tonight. A builder boom. Housing stocks surging today on the back of strong earnings from a couple of names and a potentially big change to tax policy. What it means for investments in the space right now and time to harvest gains. What the chart master says you should do with your Ethereum after the massive run it's seen this month. Plus, Netflix gets chilled by one longtime bull is changing his tune on the streamer. A defense divergence. What had Lockheed and Northrop going in very different directions today.

0:32And the newest meme stock, Karen Dixon, on the surge in shares of Kohl's. And a look at the next name that could get caught up in this frenzy. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami. And we start off with a high for homebuilders. The ITP home construction ETF surging almost 8 % to hit its best level since February. The group getting a lift thanks to earnings beats out of DR Horton and Pulte Group. Pulte rising over 11 % for its best day in nearly three years. while D.R. Horton surged 17 percent for its best day since 2009.

1:07Separately, President Trump seemed to confirm today that he is considering a proposal to end capital gains taxes on home sales, a move that could be a game changer for the industry. For more on that, let's bring in Eamon Jabbers in Washington. Eamon. Yeah, Melissa, it depends on how hard you hit the word considering there, right? I mean, this is a proposal that's on Capitol Hill. Congresswoman Marjorie Taylor Greene has a bill that would eliminate capital gains taxes on home sales. So that's something that is kicking around in Washington. The president was asked about it by a person who was in the Oval Office with him today during a press availability.

1:43He said he's considering it. And he also had this to say. Take a listen. If the Fed would lower the rates, we wouldn't even have to do that. But But we are thinking about no tax on capital gains on houses. And I'm very impressed that you asked that question, because nobody knew that. How did you find that out? That's very... I'm wondering why there's a very close... So the president joking there a little bit about there being a leaker who leaked that question out to the Oval Office. But look, the folks I've talked to here, I don't get an indication, Melissa, that this is sort of a top of the agenda item.

2:19It is something they like sort of rhetorically. They like it in terms of the actual tax cut nature of it. But the reality is it's got a long way to go on Capitol Hill. No indication this is coming anytime soon from here. But the president liked the idea in the Oval Office today. Sure. And I know everything is kind of sketchy in terms of details, Eamon. But as far as we know it, this would be no capital gains taxes on primary residences, not all houses. He just said all houses. Yeah, that's right. I mean, the president here, the context is the president here is responding to a question that was thrown at him and he wants to sort of make a positive signal about it, respond positively to it.

2:57But I don't get the sense that there's a lot of traction behind the scenes on that, at least yet. And then the question would be like, what's the legislative vehicle for that up on Capitol Hill later this year? You know, a standalone bill not likely to pass on that. So is there some other thing that they could attach it to later if the president gets behind it? You know, you could be looking at months and months before anything actually gets voted on. Sure. Eamon, thank you. Eamon Javers from the White House. OK, there are a lot of caveats associated with this. And of course, we don't know a lot of the details.

3:28But still, if we are to think about things that can facilitate transaction in this market, it does seem like the administration is committed on some level to make the housing market better, to get people out of their, you know, 3 percent mortgage rates and get some deals done. If you can't do it on the rate front, you're going to do it somewhere else. So that's, listen, the Pulte report was fine, I think. I don't think it necessitated the kind of move you saw. I don't think the move was commensurate with the numbers in the guide. But this is exciting, people, clearly. And then if you do get rates lower, forget about the rate cut, if rates move in the right direction, then maybe you get some tailwinds here.

4:07But to me, the mitigating factor continues to be what happens on the employment side of things. And although people will say the employment picture is still robust and it is through the lens of the 4.2 percent or 4.1 percent, there are things below the surface that are concerning. Yeah, I mean, I just think it's dumb, this whole tax thing, because if you think about it, I think the average price of a home in America is like a half a million dollars, about less than 10 percent, maybe 8 percent or over a million dollars. Right. So if you're talking about a cap gain that you're not going to have to be taxed on that sort of thing.

4:37Well, you can already roll a half a million dollars again for a married couple into a new home on tax that exists right here. And I think that when you really break this down, the only thing it really does is make housing more unaffordable. If you think about it. Right. If you're going to kind of roll into a higher priced home and you think that you're not going to have taxes, I don't think it really does anything for affordability for those folks that are looking to buy a first home. Even if that unlocks supply? Because they're rolling out of a house, so that house is now on the market. Maybe.

5:08I mean, this is stupid, okay? It's not going to happen anyway. You know what? I'm just saying. Let's talk about Pulte's earnings. Like, this is dumb, you know? I don't know. I think it's sort of interesting, right, and the reaction to it. I mean, so D.R. Horton, the earnings were very good. The response in the stock, I thought, was excessive maybe a little bit. But you know what? It's come from a long way down. I thought this was actually an interesting idea. Do you remember during the campaign when the Harris team thought of a$25 ,000 cash for anyone buying a new home? Yes. Now, that seemed highly inflationary, right?

5:44Everybody then would have$25 ,000, and the price of all homes would go up$25 ,000. This, I think, is sort of interesting because I do think there are homes that would fall under the—that it would be meaningful for the sellers. and they've been hanging on, whether it's because they have a low mortgage or just because they would have a big tax bill. And so to unlock some supply, I think just when you have easy supply to use. But why aren't they doing it right now? You have the break. You have up to half a million dollars for married couples that you don't have to pay tax on. If you don't want to buy another home, let's say you are retiring, you're looking to size down, you don't want to buy another home, maybe you want to rent.

6:18But those people probably— If you want to downsize, you don't need an extra—that doesn't really— If we just do the math, if the average home in America is about 500 grand and you already have a$500 ,000 benefit and there's only, you know, 8 % of homes that are above$1 million. And only 8 % of the homes in America are overvalued over a million dollars. It's netting out. One thing that I think would maybe make it a little more interesting if we said, all right, we're going to have this for two years. And then that's it. And I think that would maybe give some impetus to sellers who are maybe on the fence.

6:52And so if you do unlock supply, I don't know, I sort of think it's interesting, the response and all of the stocks related, the Home Depots and the furniture and Zillow, which is my sort of biggest position related to real estate. If you have more activity on a platform, that's great margin improvement. I think the best thing about what happened to homebuilders today is that the chart, I mean, to me, ultimately, they got about above the 200 day. They haven't been there in a long time. They've been basing. They've been reacting to interest rate dynamics. They really haven't been reacting to the macro, if anything.

7:23All the housing data that we continue to get show that new family starts and mortgage applications have ground to multi-year lows. So I don't think the industry is on fire. I think, as we've talked about here, the earnings we got today from Pulte, they guided to lower third quarter deliveries. The best thing about their numbers were the margins were better. No question. That was a real bright spot. And it was a reason for the stock to rally two, three, four percent. Did these headlines goose up the sector? Yes, they did. I think it happened also, though, on a day when there was just massive rotation.

7:54Today was all about going into sectors that have been beaten up, sectors, though, that have put in a base. Look at health care. Look at what happened across some of the consumer staples names. So I'm going to kind of play that. I don't think that the fundamentals have changed all that much for either on the macro or the bottom up. And I just think this was a story of an oversold sector on a day when you had rotation, when you had decent earnings and the bar was low. If we know that rates are coming down and we do know it's just a matter of when, these stocks should theoretically move higher in advance?

8:22They should. And so is part of this 17 percent move higher, part of this 11 percent move higher? I would push back a little bit on the we know that rates are going. I don't know that. I mean, I think that there's a want for the Fed to cut rates. I don't think that means that rates are going lower, which sounds somewhat counterintuitive. Or on the long end, right? Or on the long end. I mean, listen. The Fed will deliver a rate cut, but the long end may not. They could cut rates. Jerome Powell could come step next to me on the show and say, hey, guess what? I've been watching. By the way, he's a big fan of the show.

8:49Huge fan of the show. I'm sure he's watching right now. And I'm not convinced that the back end of the curve is going to go lower. So, listen, if you just want proof positive, go back in September. Tenure yields were 3.6 % when they started cutting rates. You saw what happened. I think there's a chance that happens as well. So I don't think the rate cut is this panacea that people think that it is. So it sounds like nobody here is a fan of housing, the home builder stock specifically. But how about the home-related stocks? You can still be a bull on your Home Depot, Tim, without this. I am bulls on Home Depot.

9:17I think this is a stock that's been kind of flatlining over the last six months. This is a stock that I do think is more, you know, will be a beneficiary of the fact that people are staying in their homes and that actually the job market's more resilient, that people are starting to spend. I do think inflation on some level has caught up to them, even though it does help the top line. And we've talked about their pro business and we've talked about some of the acquisition, getting into distribution and broadening the business model. I like Home Depot. I think it's best in breed. I think Lowe's will, for the near future, be trading at a discount to Home Depot.

9:49And I would be taking the best stock in the sector that I do think has great exposure to the consumer here. All right. For more on the outlook for housing, let's bring in Daryl Fairweather, chief economist at Redfin. Daryl, great to have you with us. I understand that this proposal is up in the air. We don't have a lot of details. What do you think this would do to the housing market if there were no capital gains taxes on the gains from primary residences? Yes. It's clear to me whether this would have a large impact. Like, if you are somebody who is really paying attention to capital gains tax, you would want to sell when you're approaching that current limit of having$500 ,000 for a married couple.

10:28It's about half that for a single person. But once you're reaching that limit, that's when there's this big incentive to sell and to buy again because then you can reset. and your capital gains resets as well. If you extend the limit forever, then I'm not sure maybe people will want to stay in their homes even longer because now there's no downside to staying past when your value has gone up by more than that$500 ,000 amount. So it's not clear to me this would help the housing market. If anything, I would like to see them reduce taxes on improvements to homes, like if you're putting in an ADU and that's what increases the value of your home.

11:01It doesn't make sense that you should be penalized for that when we need as many housing units as possible. That's interesting. What is that state of the housing market so far? It does seem like perhaps it's becoming a little bit more balanced. I mean, according to your competitor, Zillow, 26.6 percent of listings saw a price cut in June, and that's the highest in a June since 2018. I mean, it does seem like the market is rebalancing a bit. It is turning into a buyer's market. There are simply more homes for sale and there are buyers who want them. That's especially true in Florida and Texas and other states that built a lot during the pandemic.

11:40And that means that as a buyer, you can negotiate a better deal. And if you don't even like what is for sale, you can go look at the rental market, which has been pretty stable. So overall, if you're in that first-time homebuyer or buyer category, at least you have more negotiating power, even though affordability is still quite poor. Daryl, it's Karen. Thanks for being on. So how much do prices, I know it's different in each part of the country, but how much do prices really need to come in before we really start to see more transactions happening? I think we'll start to see more transactions happening later this year because we're starting to see prices come down.

12:17We're starting to see sellers wake up and realize that they need to meet buyers where they're at. And that's what's really slowing down transactions right now is sellers and buyers just not being on the same page. So now that we're seeing sellers react, Hopefully that will facilitate more deals and they'll happen at lower prices, the prices the buyers are setting. So, Dara, what puts those people on the same page? Is it an unemployment rate that moves precipitously to the upside or is it the much anticipated, much hoped for yields coming down on the back end of the curve? I think it's just homes sitting on the market and sellers realizing that their home isn't selling at the prices that they're putting it at.

12:54And with comps coming down, that means that when you're looking at what you could sell, you're seeing what your neighbor sold for. And that's a wake up for people. It's just reality. So I think it just takes a little while for reality to settle in for sellers. All right, Daryl, great to speak with you. Thank you. Thank you. Daryl Fairweather. To add to the price cuts, the listings in June, according to Zillow, the highest share of home builders have cut their prices in July. And that is 38 percent since 2022. And that's the last resort for for home builders, right, to cut their prices. And you talked about them buying down, right, buying down rates, incentives.

13:35And we've seen average selling prices coming down along the spectrum of home builders. I mean, it's all sort of lining up for the move that we saw until last week or so in the home builders lower, which absolutely made sense. This is, I think, to Tim's point, at least with the five major homebuilders that are 45 % of the ITB, I think this is just a bounce off an oversold condition. Yeah, we talk about the wealth effect all the time, right? There's two main things. It's the stock market and then the housing market, right? And so the stock market, it's YOLO, baby. Like, get in there. You've seen the retail numbers.

14:04It's gone absolutely ballistic this year. They didn't kind of get shaken out in April. They actually bought the dip. And you'd think that some of that, I don't know, that vibe would kind of work its way into the housing market if there really was demand. But then if you're waiting for rate cuts, right, last year, September and into December, they cut interest rates. So the Fed did 100 basis points. And you know where the 30 year fixed mortgage was? 6.85 percent to end the year. You know where it is right now? 6.85 percent right now. So it just doesn't seem like there's too many incentives right now.

14:34And this seemed like a planted question. Obviously, it's a talking point. And it just doesn't seem like anything that's going to happen. But it's politically popular. So, yeah, it may just be a headline. I don't think the macro changed today. I do think if you look at home builders, the message I heard, I know that Pulte said that they had better gross margins. But I look at copper prices at all time high, and I talk about that a lot. But the impact of copper in the price of a home is significant. The price of building materials, especially those that have to be sourced either abroad or ones that aren't as cheap to buy here but are bought here.

15:06I mean, the price of building a home is going through the roof. If you ask anybody who's building a home, their price per square foot has probably doubled since before COVID. So I don't think any of that's attractive for the housing market. The best thing about these housing stocks are the charts. And I'm not sure that's something I want to go chase. I think, though, to Guy's point about the labor market, right, that is a linchpin. And if that were to loosen, I think that would have a very dramatic effect. Coming up, wild action in shares of Kohl's. The department store stock surges in an apparent short squeeze.

15:34The details on that one ahead. But first, an earnings alert on Texas Instruments shares on the move after its report. The numbers from that quarter next do not go anywhere. Fast Money is back in two.

15:49This is Fast Money with Melissa Lee right here on CNBC.

16:04Welcome back to Fast Money. we've got an earnings alert on Texas Instruments. Shares are dropping down about 11 percent right now, despite the company beating EPS and revenue expectations. Christina Parts Nevelis has got the details on this. Christina. Well, investors are really surprised, Melissa, by the change in tone from management. Texas Instruments showed that auto was down sequentially, gross margins flat sequentially, with the guidance that margins would continue to be flat in this current quarter, despite what they're calling a cyclical recovery, especially in industrial. So on the earnings call, which just wrapped up.

16:34The CEO warning that automotive is, quote, not recovered yet and that customers are just really cautious right now. They're not replenishing their inventories. Similar to what we saw with NXPI just yesterday, investors really wanted to see that auto recovery. They didn't get it and the stocks sold off. Texas Instruments Management saying tariffs and geopolitics continue to disrupt supply chains and that the CEO says, quote, I think that's not over, despite the pause with the U.S. and China. Speaking of China, management warning that they saw higher demand from China in the second quarter, up 19 % sequentially, driven primarily by industrial demand, not auto.

17:09The pop in demand, though, leaves management cautious for Q3 because they didn't say it directly, but it's just really about a pull forward from the tariffs, people just rushing to order before they get put in place. Lastly, management warning that the guide didn't include the recently enacted tax legislation. They expect their tax rate to actually climb in 2025 and then should decrease in 2026 and beyond. But you can see the reaction in the stock because investors really had high hopes. Share price had increased almost 45 percent just over the last three months, but they didn't get that from management on the call today.

17:44Guys, did you get did you get any commentary on China specifically? I understand that 19 percent of its revenues are from China. There was some expectation that China demand could be improved. which is curious to me given the trade war, but that auto specifically in China would be better. So it wasn't. In this case, he said that China followed what the global market was doing. So they're seeing an improvement in all the other facets, which would be personal electronics, industrials, even enterprise, which encompasses data centers. But auto was still weak, which was surprising because I know that we've seen some auto strength coming from China, but he was saying that's not necessarily the case specifically for them.

18:21All right. Christina, thanks. Christina Parts and Nevelis. All right. Big decline here. Well, so let's say yes, it is. And it's an expensive stock. And you have a double top from last August when it traded like 215, 220. So you don't have the technology working for you. I don't think the valuation makes sense either. The guide, though, they talked about weak A.I. demand. They basic Texas Instruments supplies these critical power chips that powers NVIDIA's Blackwell. So if you start to do the read through, NVIDIA should be lower on this if they're talking about weaker A.I. demand. I don't know where NVIDIA is, but I think more and more people over the next couple of hours might start connecting dots here.

18:59It's not a surprise, given also what we heard out of GM this morning, that the weakness in the auto sector. I mean, it's essentially held hostage by what's going on with tariff uncertainty. And then you throw in the fact that the autos, despite the fact that the average life of a car on the road in America right now is probably significantly longer than it should be. It's not a case where I think we even know the predictability even before tariffs where these companies are trading for. So I'm not surprised. Again, Christina hit this 45 percent move into that into that number. This was a$200 stock in May of 24.

19:29It's$190 stock right now. You guys can do the math. Meanwhile, the broader chip sector not faring well in today's session. The SMH down nearly 2 percent. Big losses in names like Micron, Broadcom, NVIDIA. The move's coming amid a report that OpenAI and SoftBank's Stargate partnership is struggling to get off the ground. The company has pledged to invest$100 billion into the project when it was announced back in January, but have now scaled back plans due to disagreements over key terms. This all according to The Wall Street Journal. We did see the impact on Oracle as well, Karen. And we saw this sort of overall rotation today, and maybe this fed into that.

20:06I think so. I mean, these groups, you know, NVIDIA and Oracle and Dell, AMD. So I think this group got hit uniquely hard, not just rotation hard. I think it was a response to this story. When they announced Stargate, it wasn't it was met with some skepticism for sure. Right. But to have this update and say, all right, this is really not very far along. Given that the run that this group has had, it's not surprising that you would have a little bit of steam come off the top, which seems appropriate. Yeah, let's put some context around this, right? So this was a$500 billion deal over four years, and it was Oracle, it was OpenAI, and it was SoftBank, which was going to do a lot of the funding.

20:48And, you know, we saw this last week or a week and a half ago where Oracle was able to announce a$30 billion deal from OpenAI, right? So we're hearing a lot of these projects, especially ones that were meant to be somewhat political. This all happened, I think, in and around the inauguration in January, early February. I just go back to the Stargate deal. Elon Musk was in the government. He tweeted out almost immediately during this press conference. He said they don't have the money. So let's be really clear about that. And then there's an article in the Journal today. Musk analyzed to raise up to$12 billion for XAI chips as startup burns through cash.

21:22So we're seeing a lot of this right now. We're going to see a bit of pullback here, and we're going to get Google tomorrow night. We're going to hear what GCP. We're going to hear about Microsoft Azure. We're going to hear, obviously, from a whole host of other guys, including Oracle, IBM, just CapEx in general, whether they're going to be reiterating these numbers. But Stargate, it always felt like a bit of a fugazi, and I think we're seeing that right now. So this isn't necessarily a question mark over the AI story, about the progress of the AI story. Listen, here's not a core weave, okay? This is this pure play, supposedly, on data centers.