Home-builder stocks take a broad beating as 10-year yield's breakout fuels demand concerns

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Home-builder stocks dropped Thursday, as a jump in Treasury yields sparked concerns that higher mortgage rates would hurt demand for new homes.

The home-builder sector suffered a unanimous selloff Thursday, as a jump in Treasury yields on the back of strong jobs data sparked concerns that higher mortgage rates would hurt demand for new homes.

The iShares U.S. Home Construction exchange-traded fund ITB slumped 2.4% in afternoon trading Thursday, with all 48 of its equity components trading lower. Among those in the ITB that provide materials that support the builders, Home Depot Inc.’s stock HD fell 2.4%, Builders FirstSource Inc. shares BLDR sank 4% and Lowe’s Companies Inc. shares LOW declined 1.3%.Meanwhile, the government chartered Federal Home Loan Mortgage Corp., known as Freddie Mac FMCC , which helps support the U.S. housing finance system, said Thursday that the 30-year fixed-rate mortgage rate averaged 6.81% as of July 6, up from 6.71% a week ago and from 5.30% a year ago.

Also weighing on the ITB was a technical chart breakout by the benchmark 10-year Treasury yield TMUBMUSD10Y , which is often used to set the levels of consumer loans, such as mortgages.

 

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