News

Home-builder Sector Suffers Selloff Despite Surge in New-Home Sales

1 Mins read

The home-builder sector faced a significant selloff on Wednesday, fueled by rising Treasury yields. This rise in yields heightened concerns about housing affordability, overshadowing the positive news of a substantial increase in new-home sales.

In morning trading, the iShares U.S. Home Construction exchange-traded fund (ITB) plummeted 1.3%, reaching its lowest point in six months. Among the 46 equity components, 42 experienced losses.

Despite this market turbulence, the U.S. Commerce Department disclosed that September witnessed a remarkable surge of 12.3% in sales of newly built homes. The annual rate of 759,000 homes sold stands as the highest level since February 2022, greatly surpassing expectations of approximately 680,000 homes.

In contrast, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) surged by 0.074 percentage points to 4.914%. Moreover, the 30-year Treasury bond yield (BX:TMUBMUSD30Y) rose by 0.092 percentage points to 5.055%. These figures easily crossed the critical 5% threshold after remaining below it for two days.

The upward trajectory of Treasury yields inevitably begets higher mortgage rates, which have now reached unprecedented levels seen in decades. Consequently, this steep rise further exacerbates the issue of housing affordability.

Rising Prices and Mortgage Rates Impact Affordability in the Real Estate Market

Declining Stocks and Performance of Home-Building Companies

Overall, the real estate market is facing challenges due to both rising prices and mortgage rates, leading to decreased affordability. This has impacted not only potential homeowners but also companies involved in home construction and related industries.

References

The ITB’s Recent Performance

Over the past three months, the ITB has experienced a significant decline of 19.1%, making it an unfavorable period for investors. In comparison, the S&P 500 SPX has also seen a decrease, albeit to a lesser extent, with a decline of 7.9%.

These figures indicate a challenging market environment for the ITB and the S&P 500 SPX, highlighting the need for careful consideration and analysis before making investment decisions.

Related posts
News

Wealthy foreign crypto investors descend on President Trump's golf...

4 Mins read
Top-25 meme coin holders to enjoy private VIP reception with Trump *Best Forex Trading Robots For 2022 Democratic lawmakers demand attendee names,…
News

Chinese Firms' Plan to Avoid Stock Delisting: Buy Trump's Memecoin

1 Mins read
A technology company called GD Culture Group said on May 12 that it had struck a $300 million funding deal to help…
News

Dogecoin (DOGE) Realized Profits Soar 225% in 24 Hours

1 Mins read
Dogecoin (DOGE) is once again attracting attention in the crypto market following a massive increase in profits and activity lately. According to…

Leave a Reply

Your email address will not be published. Required fields are marked *