Key Highlights

● Homebuilders staged one of the market's strongest rallies as Treasury yields slid on Thursday.

● Lennar jumped, trading around $84.45, as falling yields and mortgage rates lifted housing stocks.

● Home Depot jumped to $327.73, one of the Dow's best performers.

● The average 30-year mortgage rate eased from the prior week, a weekly survey showed.

Homebuilders staged one of the strongest rallies in the market on Thursday, October 22, as Treasury yields slid and investors searched for shelter from a punishing selloff in artificial-intelligence stocks.

The iShares U.S. Home Construction ETF (ITB) was sharply higher by midday, and the gains spread across builders, building-products makers and housing-linked retailers. The move came even as the S&P 500 fell 93.74 points to 7,663.43, its worst day since July, and the Nasdaq Composite sank 694 points.

The rate trade

The trigger was the bond market. Treasuries rallied hard, and the 10-year yield closed back below a closely watched threshold for the first time since September 22. Several estimates described it as the biggest one-day drop in the 10-year in well over a year.

Mortgage rates track the 10-year yield closely, so the move matters directly for home affordability. Freddie Mac's weekly survey also showed the average 30-year mortgage rate easing from the prior week, according to market data.

"Treasuries rallied overnight as tech stocks came under pressure amid renewed AI valuation fears," one rates strategist said.

Lennar, PulteGroup and D.R. Horton lead

Lennar (NYSE:LEN) jumped, trading around $84.45. No company-specific news was reported; the stock rallied on falling yields and mortgage rates. D.R. Horton (NYSE:DHI) also jumped, according to market data.

PulteGroup (NYSE:PHM) climbed even though its third-quarter results missed expectations. Revenue came in at $3.97 billion against estimates of $4.15 billion, and home closings declined. Chief Executive Ryan Marshall cited high mortgage rates and inflation as factors hurting demand from entry-level buyers. Investors looked past the miss and focused on the prospect of lower borrowing costs.

Suppliers and retailers join the rally

The rally reached well beyond builders. Builders FirstSource (NYSE:BLDR) jumped despite an analyst downgrade to Market Perform from Outperform. Flooring maker Mohawk Industries (NYSE:MHK) was trading at $128.70 and appliance maker Whirlpool (NYSE:WHR) at $28.80, both posting big gains with no company-specific news reported.

Home Depot (NYSE:HD) jumped to $327.73, one of the best performers in the Dow Jones Industrial Average, as it rallied with housing names. Credit bureau Equifax (NYSE:EFX) rose after an analyst upgrade to Buy and on the mortgage-rate tailwind. Online property marketplace Zillow Group (NASDAQ:Z) also rallied on rate relief.

Part of a wider rotation

The housing rally was part of a broad shift away from technology. About two of every three S&P 500 stocks rose, according to market data, and the equal-weight S&P 500 finished higher even as the cap-weighted index fell. Consumer staples had their best day since April 2025, and health care hit a record.

Homebuilders are among the most rate-sensitive stocks in the market. The 10-year yield rose to its highest since April 2002 on October 7. A move back below the key threshold offered relief, though one day does not set a trend.

The rally came despite oil hitting a five-month high, with Brent at $113.17. Higher energy costs typically threaten inflation and rates, but bond traders looked past them on Thursday.

Fed Decision and Mortgage Rates Ahead

The Federal Reserve announces its rate decision on Wednesday, October 28, after a two-day meeting. Markets priced a lower chance of a hike after Thursday's moves. Third-quarter GDP and September PCE inflation data follow on October 29.

Builders will also watch whether mortgage rates keep easing in coming weeks. A rebound in Treasury yields could quickly reverse Thursday's gains.