Housing stocks tumble on concerns about Fed’s plans
Housing-related stocks took a tumble in Thursday trading, one day after the Federal Reserve signaled it may pull back this year on its massive stimulus program designed to drive down interest rates.
The PHLX Housing Sector Index fell 5.24% as home builders took a beating on Wall Street. Some leading housing stocks declined more. The Ryland Group was down 10.12% to $38.65 a share, while PulteGroup Inc. fell 9.1% to $18.87 a share.
Low mortgage rates -- coupled with extremely low inventory and an improving economy -- have helped the housing market recover, sending home prices upward and causing home builders to ramp up construction.
Now, investors appear worried about what rising mortgage rates could mean for the housing rebound.
On Wednesday, Fed Chairman Ben S. Bernanke expressed optimism about the economic recovery and said the Fed could start tapering its buyback program this year and possibly end the effort in 2014.
But for now the program continues.
The Federal Open Market Committee voted Wednesday in a 10-2 vote to continue the $85-billion-a-month purchases of Treasury notes and mortgage-backed securities to accelerate the economy by driving down mortgage and other long-term interest rates.
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