Homebuilder stocks enjoy healthy gains after the NAHB sentiment index rose to its highest level since July 2005, with its six-month sales outlook also jumping to an 11-year high.
Despite rising mortgage rates, the post-election bounce in builder sentiment is consistent with other data showing U.S. industries are optimistic that Pres.-elect Trump will make it easier for companies to do business.
Those getting mortgages prior to last few weeks were "likely the last" to lock in at historically low rates, says the NAR's Larry Yun following this morning's disappointing Pending Home Sales report.
That report was for October, but in more current news, mortgage applications dove another 9.4% in the week ended Nov. 25 (seasonally adjusted). They've been on a downward track for a few weeks, with the speed mostly picking up amid the sharp rise in rates since the election.
Turning to rates, the 10-year Treasury yield is carving out a new 12-month-plus high, up 11 basis points to 2.40%.
The S&P 500 is flat, but the ITB is down 1.8%, and XHB 1.2%.
Average rates for 30-year fixed mortgages breached 4% and reached their highest levels since July 2015, according to the latest Freddie Mac survey.
The 30-year fixed averaged 4.03% for the week ending Nov. 23, up from last week's 3.94% - which was a huge spike from 3.57% the week before - and the 15-year fixed-rate mortgage averaged 3.25%, up from last week when it averaged 3.14%.
At this time a year ago, the 30-year and 15-year fixed rates averaged a respective 3.95% and 3.18%.
The big gains in infrastructure stocks in anticipation of government spending on roads and bridges in a new Trump administration have some analysts warning that the rally is "getting long in the tooth."
One former infrastructure bull, Daniel Clifton of Strategas Research, thinks lofty expectations are now priced into the group, adding that the belief that fiscal conservatives in Congress who have long opposed increasing the deficit would suddenly pass a trillion dollars in spending has become too optimistic.
Clifton also says Trump’s infrastructure plan in its current form relies entirely on private financing and “has little to do with the actual stocks that are rallying.”
Greg Valliere, chief global strategist at Horizon Investments, reminds that "Washington moves slowly on huge projects like this, and there’s a lag time on the economic response."
September new home sales at a seasonally adjusted annualized rate of 593K were up 3.1% from August's 575K. The August print however, was revised down from what had originally been reported as a blowout level of 659K. Still, the September number was the 2nd best of the post-crisis recovery.
On a year-over-year basis, the Sept. pace was up 29.8%.
September housing starts at a seasonally adjusted annualized rate of 1.047M fell 9% from August. They were also 11.9% below the pace of September one year ago.
The numbers may not be as weak as the headline suggests though. Single-family starts of 783K rose 8.1% from August. It was a big dip in highly volatile multifamily starts (defined as 5 units or more) which led to the overall decline.
Building permits in September of 1.225M rose 6.3% from August and 8.5% from year-ago levels.
The homebuilders have mostly had a rough run of it since interest rates began rising late this summer, but Lennar (NYSE:LEN) has suffered more than most peers, down 13.75% over the last three months vs. a 7.8% decline for the ITB.
It's an outlier to the upside today though, with a 1.25% advance on the back of an upgrade to Buy at Buckingham Research.