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Investments / The Ticker

Rising mortgage rates pressure homebuilder stocks

Stocks fall after peaking in May

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As the housing market recovers and interest rates climb, homebuilder stocks are falling, with PulteGroup (PHM) leading the decline. Forbes has more on this development:

“The only way housing demand is not affected is if the other affordability variables overwhelm the rise in interest rates. So expectations for income growth and job security have to go up, down payment terms have to fall, underwriting standards have to loosen, and lengths of amortization have to rise,” John Blank, a chief equity strategist for Zacks, said.

“These things can happen. All too often we think that a rise in interest rates will just simply lower demand. That is only the case if all of these other variables do not move,” he added. 

Source: Forbes
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