Mortgage Rates Near 7.5% Weigh on Builders and Retailers
A jump in borrowing costs and weak demand have pressured homebuilding shares, while Home Depot and Lowe’s have fallen further this month.
Homebuilding and home improvement stocks are under pressure as mortgage rates climb and consumer demand weakens. The S&P 500 Homebuilding Index has fallen 3.2% so far in September.
Lennar and KB Home have reported slumping revenues as builders face high costs and buyers pull back. Home Depot shares have dropped 11% this month, while Lowe’s has lost 8.5%.
The average rate on a 30-year fixed mortgage touched 7.5% on Monday, its first time at that level since April 2024. Mortgage rates have risen by more than half a percentage point in two weeks.
Rates briefly fell below 6% early this year, but the war in Iran and accompanying inflation drove them higher, the article reported. Elevated borrowing costs have dampened home sales and kept buyers sidelined.
As building activity slows, renovators are also focusing on smaller, cheaper products, weighing on the large home improvement retailers.
This article was produced with the help of AI technology.
Source: Yahoo Finance
