Fed rate fears hit U.S. real estate stocks
Stronger-than-expected U.S. inflation in October intensified selling pressure on real estate and homebuilding stocks as expectations grew that the Federal Reserve (Fed) could continue raising interest rates.
Money markets priced in a 25-basis-point rate hike in December, while the possibility of a 50-basis-point increase also gained attention. The yield on the 2-year U.S. Treasury rose by 17 basis points to 4.75%, while the 10-year Treasury yield increased by 13 basis points to 5%. Rising bond yields heightened concerns that mortgage borrowing costs could increase and housing demand could weaken.
Shares of major U.S. homebuilders declined amid expectations of further interest rate hikes. Lennar fell by 5.4%, Meritage Homes by 4.4%, PulteGroup by 3.9%, D.R. Horton by 3.8%, and Toll Brothers by 2.7%. Analysts warned that higher long-term Treasury yields could push mortgage rates upward, negatively affecting housing affordability. Meanwhile, according to data from the Federal Reserve Bank of New York, U.S. mortgage debt reached $13.37 trillion in the third quarter of 2026, increasing by $257 billion from the previous quarter.