Mortgage Rates Reach a One-Year High, Impacting Home Improvement Retailers
The 30-year fixed-rate mortgage has climbed to a one-year high of 6.71%, driven by falling Treasury bond prices and rising yields due to concerns over inflation, geopolitical tensions in Iran, and U.S. debt levels exceeding $40 trillion. Lowe's (LOW) and Home Depot (HD), both heavily tied to the housing market through their home improvement products, are feeling the effects of these high rates. Lowe’s recently revised its full-year sales forecast downward from a range of $92 billion to $94 billion to just $92 billion, while also lowering operating margin guidance. Home Depot maintained its outlook but acknowledged ongoing pressure due to low housing turnover and affordability issues. Despite this, Home Depot reported 5.7% year-over-year revenue growth in the second quarter.
Topics: bond yields housing market inflation mortgage rates Treasury bonds