Last year, the United States Federal Reserve moved to pursue the most aggressive interest rate tightening policy in the 21st century. This was enacted to beat back soaring inflation rates that were exacerbated by radical monetary and fiscal policy during the COVID-19 pandemic. Now, in late 2023, the U.S. housing market has been hit hard by this significant shift.
RH (NYSE:RH), or Restoration Hardware, is a California-based company that operates as a retailer in the home furnishings. It operates under RH Galleries and RH brand names in the District of Columbia and Canada. Moreover, it operates Waterworks showrooms in the U.S. and the United Kingdom. Shares of this home furnishings stock have dropped 4.4% so far in 2023 as of close on Friday, December 8, 2023. That has pushed the stock into negative territory in the year-over-year period.
Some investors may have been spooked after Berkshire Hathaway moved to dump its holdings of RH earlier this year. To some, this indicated that legendary investor Warren Buffett and his team had a negative view of the North American housing market for the rest of 2023. However, the stock enjoyed a strong uptick in the months that followed Berkshire’s divestment.
Restoration Hardware recently communicated to customers that its hefty catalogue will be late. It added that promotions would apply pressure to its bottom line in what it called a “frozen” housing market. On the positive side, the US Federal Reserve paused its rate hiking in the final months of 2023. Oddsmakers currently indicate that a rate decrease could come as early as the first half of 2024. That would be good news for the housing market going forward.