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The final trades of the day with CNBC’s Melissa Lee and the Fast Money traders.
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Tag: iShares U.S. Home Construction ETF
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Options Action: Is there strength in the home building sector?
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The ‘Options Action’ traders discuss the home building sector and whether to hold out or sell in the current market.
03:55
Fri, May 19 20236:02 PM EDT
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Housing stocks see broad rally after strong home-sales data
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The home-building sector enjoyed a broad rally in morning trading Tuesday, after data showing existing-home sales in February rose a lot more than expected. The iShares U.S. Home Construction exchange-traded fund
ITB,
+0.99%
climbed 1.3% toward a five-week high, with all 48 equity components gaining ground. Among the ETF’s more active components, shares of Home Depot Inc.
HD,
-0.02%
advanced 0.9%, D.R. Horton Inc.
DHI,
+0.04%
rose 0.5%, KB Home
KBH,
+2.83%
tacked on 2.4%, Lennar Corp.
LEN,
+1.27%
rallied 1.3% and PulteGroup Inc.
PHM,
+1.03%
was up 1.1%. The National Association of Realtors said Tuesday that existing-home sales for February leapt 14.5% to an annual rate of 4.58 million, the largest increase since July 2020, enough to reverse 12 months of losses and well above expectations of 4.2 million. The home construction ETF has hiked up 12.0% over the past three months, while the S&P 500
SPX,
+1.27%
has gained 2.7%.[ad_2]
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Mortgage rates drop to the 5% range for the first time since September
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Prospective buyers at an open house in Florida.
Mike Stocker | South Florida Sun Sentinel | Tribune News Service | Getty Images
The average rate on the 30-year fixed rate mortgage has fallen to 5.99%, according to Mortgage News Daily.
The housing market hasn’t seen the rate with a five handle since a brief blip in early September. Before that, it was in early August.
related investing news
The rate started this week at 6.21% and fell sharply Wednesday after Federal Reserve Chairman Jerome Powell said inflation “has eased somewhat but remains elevated,” which was a shift from previous language.
That sent bond yields lower, and mortgage rates loosely follow the yield on the 10-year Treasury.
“Measured steps can continue as long as the economic and inflation data is there to support them. This means rates can make progress down into the 5’s but are unlikely to stampede quickly into the 4’s,” said Matthew Graham, chief operating officer at Mortgage News Daily. “I’m not saying that won’t happen–just that it would take a bit more time than some of the rate rallies we remember from the past.”
Mortgage rates peaked in October with the 30-year fixed at 7.37% and have been sliding since then. For potential homebuyers that means savings. For a consumer purchasing a $400,000 home today with a 20% down payment, the monthly payment is $293 less than it would have been in October.
Lower rates already appear to be juicing buyer interest.
Pending home sales, which measure signed contracts on existing homes, rose in December for the first time in six months. They gained 2% compared with November, according to the National Association of Realtors.
Stocks of the nation’s homebuilders have been on a tear since rates started to fall back and several are seeing 52-week highs Thursday. The U.S. Home Construction ETF is hitting a new one-year high, up over 3% on the day.
Homebuilder stocks are also reacting positively to earnings beats reported this week from PulteGroup and last week from the nation’s largest homebuilder, D.R. Horton. Both builders reported seeing renewed buyer interest in December, attributing that to lower mortgage rates.
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A call to action on the homebuilders
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The traders make their final moves of the week. With CNBC’s Dominic Chu and the Options Action traders, Carter Worth, Mike Khouw and Scott Nations.
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