Surging mortgage rates have finally cooled off the housing market. The cooldown, though, is coming unevenly, accentuating differences between the existing home market and new construction.
The supply of existing homes, while still below normal, is surging as sales decline. Homebuilder stocks have slumped. Investors were braced for the worst when two major homebuilders last week reported quarterly earnings — along with their market outlook.
Instead, the companies were remarkably sanguine. While acknowledging that the market has slowed, Lennar Corp. and KB Home said that their businesses have been resilient, at least so far. The current economic environment, in which interest rates are rising but — importantly — the labor market remains solid, appears to be tougher for the existing-home market while homebuilders are able to muddle through.
