Homebuilder stocks notched fresh highs as mortgage rates saw their biggest plunge in 15 years.
The 30-year fixed mortgage rate has fallen 69 basis points in the last five weeks, the steepest drop since 2008.
Shares of Toll Brothers, Lennar, and DR Horton all hit new records.
Homebuilder stocks just notched fresh highs, thanks to mortgage rates seeing their steepest plunge in 15 years.
The rate on the 30-year fixed mortgage slipped to 7.17% in the week ending December 1, according to the Mortgage Bankers Association, plummeting 69 basis points over the past five weeks. That marks the steepest decline in mortgage rates during for that timeframe since 2008, Bloomberg reported.
Toll Brothers shares rose 2% on Wednesday to close at $88.90, a new all-time record. Lennar also rose 2% to an all-time closing record of $135.37, as did DR Horton, which rose 2% to $133.61.
The SPDR S&P Homebuilders exchange-traded also notched a new closing high, rising 1% to $86.68. The ETF is up 42% from levels at the start of the year.
Homebuilders have been a key source of supply for the housing market recently, as high mortgage rates deterred homeowners from listing their properties for sale.
The result was a housing market in a state of limbo, with scarce supply pushing up home prices and making for one of the most unaffordable housing climates seen in years.
But lower mortgage rates are expected to unlock more housing inventory. That could ease the upwards pressure on home prices, causing the sales freeze to slowly thaw out.
Still, experts say mortgage rates have way more to fall before home sales see anything close to a full recovery. The 30-year fixed rate is likely to fall to just 6.6% by the end of 2024, Redfin predicted, which will allow home sales to rise 5%. Home prices, meanwhile, are set to fall by just 1%.
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