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Homebuilder sentiment hits 10-year low, drops 5 points in November

Yahoo Finance's Jared Blikre details the latest homebuilder sentiment data, which sank to its lowest number in a decade.

Video transcript

RACHELLE AKUFFO: I want to turn our attention now to the National Association of Homebuilders. Now they're reporting a decline in homebuilder sentiment for the 11th straight month, the index hitting a 10-year low. Now, builders hoping to increase their chances of making a deal are turning increasingly toward incentives. 25% report paying points for buyers and 37% cutting prices.

Now some possible light at the end of the tunnel, though. The Mortgage Bankers Association reporting a drop in mortgage rates to just under 7%. And it also reported a rise in mortgage application volume compared to the week prior. Now all of this data, of course, is having an impact on homebuilder stocks. Jared Blikre is here to get us up to speed on that. Hey, Jared.


JARED BLIKRE: Hi there. Well, I decided to do a study in contrast here. We have the SPDR Homebuilder stocks. That is in purple. That is this line right here. This is going back one month. And you can see it's up about 12% right now. This is versus TLT. That is the iShares T-bond ETF. And so this tracks the bond market. When this goes up, that means yields are coming down. That is more favorable for housing stocks and homebuilder stocks.

And when it is going the opposite direction, well, let's just take a look at what's happened over the trailing year because you can see these two are very highly correlated. We've had a rising interest rate environment. At this stage in the business cycle, the Fed is raising rates rather aggressively, and homebuilders tend to be first on the chopping block.

And tomorrow we're going to get new home sales and also permit new housing starts. And we're going to see if that data reflects what's going on versus our expectations and how that's been reflected in some of the homebuilder sentiment that we've been seeing here today.

And I want to close by doing some technical analysis on the homebuilders sector. So let's go to homebuilders if we can have-- let's see if I can find it right here. And I just saw it, and here we go. Well, looks like I'm not going to be able to find this. Well, sorry about this, guys. Usually, I do have a better time at the YFi Interactive.

I think I can go back to the retail stocks here and find at least Home Depot and Lowe's. Home Depot here, we can see on a one-year basis. It has-- well, let's see here. This is really interesting. Home Depot has finally broken out of its downward trend line here. So has Lowe's. So maybe on the upswing here just a little bit, something to nibble on. But we're going to get that data tomorrow, guys.