Spiking yields weigh on homebuilder stocks, but their bonds are telling another story

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The unrelenting rise in U.S. Treasury yields sent the stocks of rate-sensitive homebuilder stocks lower on Tuesday in a continuation of the recent trend.

The unrelenting rise in U.S. Treasury yields that is roiling global financial markets sent the stocks of rate-sensitive homebuilder stocks lower on Tuesday in a continuation of the recent trend.

The move comes as the housing market is already reeling from mortgage rates that are the highest in 23 years at an average of 6.72% for a 15-year loan and 7.65% for a 30-year fixed-rate loan.Homebuilder bonds, however, are holding up. As the following charts from data solutions provider BondCliQ Media Services illustrate, there has been greater buying in the bonds of Beazer Homes USA Inc. BZH, -6.42%, D.R. Horton Inc. DHI, -3.47%, Hovnanian Enterprises Inc. HOV, -12.15%, KB Home KBH, -4.12%, M.D.C. Holdings Inc. MDC, -4.29%, NVR Inc. NVR, -1.69% and Toll Brothers Inc. TOL, -3.52%. Only PulteGroup Inc. PHM, -3.22% has seen greater selling.

The following chart shows how much outstanding debt each company is facing and when it comes due, with D.R. Horton the clear leader with $1.2 billion of debt maturing in less than a year. That means it’s facing the most refinancing risk. The housing sector has struggled as the Federal Reserve has moved rather higher. An increase in mortgage rates in August pushed pending home sales down to the lowest level since April 2020. The median price of an existing home was $407,100.Beazer Homes’ stock was the biggest decliner on Tuesday, trading down 6.5%. That was followed by M.D.C., which was down 5.7% and KB Home, which was down 4.5%.

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