US housing market hurts appliance sales, Whirlpool says

The U.S. housing market has been tough for buyers, and a slowdown in sales activity means Americans are now spending significantly less on big, pricey fixtures.

In its latest earnings report, Whirlpool lowered its full-year outlook, adjusting its annual profit forecast to $12 per share, from a range of $13 to $15, due to a decline in sales of higher-priced items.

Whirlpool’s North American major appliance sales fell 5.7% year over year, weighing on profits, even as sales in Latin America and Asia rose 11.3% and 19.7%, respectively.

Whirlpool shares have fallen about 17% since the beginning of the year and were trading at $100.65 a share on Thursday.

CEO Marc Bitzer attributes the decline in sales to a difficult housing market. In June, U.S. home sales hit their lowest level since 2010, falling 5.4% from May to June, according to data from the National Association of Realtors.

Meanwhile, the median home price rose 4.1% year over year to $426,900, setting another monthly record.

“You have a consumer that is somewhere between inflation, rising interest rates, global wars and an election campaign that seems to be playing out in apocalyptic scenarios. That is not helping consumer confidence,” Bitzer told Bloomberg in an interview.

During an earnings conference call, Bitzer said the company expects the Fed to cut interest rates this year to curb housing price growth, but those cuts have not yet happened.

“There is no doubt that we have been and continue to be in a downturn in the U.S. housing market. As interest rates come down, things will calm down at some point, and we are well-positioned to benefit from improved demand,” he said.

Federal Reserve officials have hinted at a rate cut in September, and markets are expecting as many as three cuts by the end of the year as a soft landing scenario of stable economic growth and disinflation materializes.