Mortgage Rates Hit Five-Week Highs—But Homebuyers Are Returning, Boosting Home Depot, Lowe's And Other Builders

Despite mortgage rates climbing to five-week highs, sidelined homebuyers are returning to the market in a sudden surge, creating a lucrative plot twist for major homebuilders like D.R. Horton Inc. (NYSE:DHI) and Lennar Corp. (NYSE:LEN).

Buyers Accept The ‘New Normal’

The 30-year fixed-rate mortgage currently averages 6.37%, according to the latest Freddie Mac Primary Mortgage Market Survey, up from 6.30% last week. While the Mortgage Bankers Association (MBA), as reported a brief Wednesday spike to 6.46%, the overarching data reveal a market where buyers are finally tired of waiting.

Purchase mortgage applications jumped 4% over the past week and are currently tracking 7% higher year-over-year.

Industry leaders are observing a clear shift in consumer psychology. Potential homebuyers “shrugged off” the current economic and mortgage rate uncertainties and returned to the market, Joel Kan, an MBA economist, told CNBC.

National Association of Realtors chief economist Lawrence Yun confirmed the turning tide, noting agents are reporting a “surge in buyer demand in just the last few weeks.”

New Construction Captures Demand

This renewed buyer enthusiasm is colliding directly with a severely constrained supply of existing homes. Homeowners locked into historically low interest rates are overwhelmingly refusing to sell and take on a new 6.37% mortgage.

With existing inventory essentially frozen, buyers are pivoting to new construction. Freddie Mac officially corroborated this shift, noting “slightly better conditions for buyers with a boost in new-home sales” and “higher inventory” entering the market.

This dynamic serves as a massive tailwind for builders like D.R. Horton and Lennar, who are actively filling the supply vacuum left by existing homeowners.

Remodeling Surges As Refinances Sink

The rate lock-in effect is also radically redirecting consumer spending. A pervasive stay and rehab mentality is boosting home improvement retailers like Home Depot Inc. (NYSE:HD) and Lowe’s Companies Inc. (NYSE:LOW), as trapped homeowners invest in renovations instead of relocating.

Conversely, the stagnant existing-home market continues to punish the refinance sector, with applications dropping another 1%.

While the sudden jump in purchase applications offers originators a much-needed lifeline, mortgage servicers remain highly reliant on managing their existing, low-rate loan portfolios to weather the current cycle.

Rising interest rates are weighing on the trajectory of home sales activity through this spring selling season. Existing home sales have expanded by 2.3% (NSA) through the first four months of this year, a fraction of the 8.6% rise that is average. Rising price of oil and rising… pic.twitter.com/raAcOtAmql

— Equity Clock (@EquityClock) May 13, 2026

Here’s a list of some real estate and REIT-linked ETFs for investors to consider.

ETFs	YTD Performance	6-Month Performance	One Year Performance
SPDR S&P Homebuilders ETF (NYSE:XHB)	-3.87%	-4.94%	-2.20%
Vanguard Real Estate Index Fund ETF (NYSE:VNQ)	7.48%	5.94%	8.40%
Schwab US REIT ETF (NYSE:SCHH)	12.11%	10.79%	11.58%
Real Estate Select Sector SPDR Fund (NYSE:XLRE)	8.57%	6.86%	7.59%
iShares US Real Estate ETF (NYSE:IYR)	7.71%	6.45%	9.10%
iShares Core US REIT ETF (NYSE:USRT)	12.94%	11.14%	14.74%
DFA Dimensional Global Real Estate ETF (NYSE:DFGR)	8.89%	6.83%	9.73%
SPDR Dow Jones REIT ETF (NYSE:RWR)	11.30%	10.15%	13.88%

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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