How I Made $5000 in the Stock Market

Real-Estate Stocks Have Bounced. Lower Mortgage Rates Help.

Dec 11, 2025 16:45:00 -0500 by Shaina Mishkin | #Real Estate

(Justin Sullivan/Getty Images)

Key Points

Real estate industry stocks across the board perked up after the Federal Reserve on Wednesday trimmed interest rates. It was some good news in a housing market long starved for it.

Housing-related companies largely ended Thursday higher as investors breathed a sigh of relief that mortgage rates fell after December’s FOMC meeting. Home builders, measured by the iShares U.S. Home Construction exchange-traded fund, closed 0.6% higher, marking the ETF’s best two-day stretch since Nov. 26, according to Dow Jones Market Data.

Building materials retailer Home Depot closed 1.8% higher, making it the ninth best performer in the Dow Jones Industrial Average today. Mortgage lender Rocket gained 0.6%, and is up 1.5% since the Fed announcement at 2 p.m. on Wednesday.

Fixed 30-year mortgage rates measured midday on Thursday by Mortgage News Daily were 6.26%, down from 6.36% on Monday. Unlike adjustable-rate mortgages, the popular 30-year fixed rate isn’t guaranteed to fall in response to a Fed rate cut because of its connection to the 10-year Treasury yield. In fact, mortgage rates actually rose after Fed meetings earlier this year as investors took a more hawkish view of monetary policy moving forward.

Lower mortgage rates are clearly a boon for home buyers. Less money spent on home financing costs allows a buyer to increase their budget or keep a little more money in the bank.

Investors in home builders could be looking for signs that the worst is over, Rick Palacios, Jr., director of research at John Burns Research and Consulting, says. “This whole industry across housing has just been hit pretty rough in 2025,” he notes, adding that the stocks typically perform well in the late autumn as investors look ahead to the spring season.

But homeowners with higher rates stand to benefit, too. While plenty of them have sub-4% mortgage rates, or no mortgage at all, roughly 20% of borrowers had a mortgage rate higher than 6% as of the end of October, ICE Mortgage Technologies data show. If mortgage rates ease to the 6% level some economists expect in 2026, more borrowers could seize the opportunity to refinance.

Some homeowners already are: refinance application volume measured by the Mortgage Bankers Association last week was 88% higher than it was one year prior, when the average 30-year fixed mortgage rate was 0.34 percentage point higher.

Refinance potential is among the reasons Eric Hagen, BTIG’s analyst covering mortgage and specialty finance, likes Rocket, which he rates Buy with a $25 price target.

The stock, which closed at $19.36 on Thursday, is up nearly 72% this year, according to Dow Jones Market Data. Roughly 60% of that increase came after March 31, when it announced its combination with mortgage servicer Mr. Cooper.

Following the deal, which closed this autumn, the company has a much bigger mortgage servicing portfolio, Hagen notes. A “chunk” of those borrowers have high mortgage rates, Hagen notes. “It’s huge optionality to refi those borrowers when rates fall,” he says.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com