Homebuilder stocks have been one of the brightest spots in the market’s rally, but news out Tuesday shows the sector remains sensitive to interest rates and their influence on the housing market.
Shares of D.R. Horton (DHI) sank by 9% Tuesday midday after the homebuilder reported weaker-than-expected quarterly orders and posted first quarter earnings per share that missed analyst estimates. Investor reaction also dragged down the SPDR S&P Homebuilders ETF (XHB) by as much as 3%.
Both XHB and D.R. Horton closed at record highs on Monday.
Specifically, D.R. Horton said on its call with analysts it would be cautious in making changes to its concession strategy — which consists of mortgage rate buydowns that hurt margins but make homes more affordable for buyers — should mortgage rates stall in marching lower.
“The use of those rate buydowns is not just new to us over the last 12…
