Homebuilders were one of the few bright spots during a huge stock sell-off Wednesday, with hopes rising that a rush by investors into the bond market would drive mortgage rates lower.
The Dow Jones industrial average dropped as much as 460 points and investors fled to the safety of bonds, which are a safe haven for cash during market sell-offs. The Dow closed down 173.45 points, or 1.1 per cent, to 16,141.74.
As bond prices rise, yields drop. The 10-year Treasury note briefly fell below 2 per cent for the first time since June 2013. It recovered to 2.14 per cent in afternoon trading.
The meagre yields in bonds can drive mortgage rates lower. Rising mortgage rates have been one of the reasons that so many people have been priced out of the housing market this year.
On Wednesday, as the Standard & Poor's 500 fell 0.8 per cent, the housing sector moved in the opposite direction.
— Shares of Beazer Homes USA Inc. closed up 57 cents, or 3.5 per cent, to $16.91.
— DR Horton Inc. picked up 60 cents, or 3 per cent, to $20.63.
— Hovnanian Enterprises Inc. rose 15 cents, or 4.6 per cent, to $3.43.
— KB Home gained 55 cents, or 3.9 per cent, to $14.62.
— Lennar Corp. gained $1.41, or 3.7 per cent, to $39.74.
— PulteGroup Inc. advanced 60 cents, or 3.5 per cent, to $17.59.
— Toll Brothers Inc. added 33 cents, or 1.1 per cent, to $30.31.
This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.