Interest rate increase expectations in the USA pressured real estate stocks

Concerns that inflationary pressures may continue in the United States have reinforced expectations that the US Federal Reserve (Fed) may take broader tightening steps in monetary policy.

With the acceleration in price increases, it is considered certain that the Fed will increase the policy rate by 25 basis points in December, while the possibilities of a 50 basis point increase have also come to the fore.

While both headline and core inflation in the country were above expectations on a monthly basis in October, this strengthened the predictions that the Fed might harden its hawkish stance and led to an upward movement in bond interest rates.

Accordingly, the reflections of the strengthening of the Fed's tightening expectations on the bond markets were observed. US 2, 5 and 10 year bond interest rates increased significantly.

The US 2-year bond yield, which is the most sensitive to the Fed's policies, increased by 17 basis points to 4.75 percent yesterday, and the 10-year bond yield increased by 13 basis points to 5 percent.

Bond markets in the United States are closed today due to Veterans Day.

In this regard, concerns that the increase in long-term bond yields may put upward pressure on housing loan interest rates and weaken housing demand also had a negative impact on the shares of companies operating in the sector.

Real estate investment trusts, which are sensitive to changes in interest rates due to high indebtedness rates and financing needs, were also negatively affected by concerns about increasing borrowing costs.

Analysts stated that mortgage (housing loan) interest rates in the USA are generally shaped by adding a certain margin to the 10-year bond yield that reflects credit risk, market conditions and other costs, and noted that the rise in bond yields puts upward pressure on mortgage loan rates.

Real estate and housing stocks are under pressure

With these developments, the shares of DR Horton, Lennar, PulteGroup and Toll Brothers, which are among the leading housing and construction companies in the USA, were under pressure due to rising bond yields and weakening expectations for the housing market.

Shares of US DR Horton fell by 3.8 percent, shares of housing, construction and real estate company Lennar fell by 5.4 percent, shares of housing manufacturer Meritaga fell by 4.4 percent, shares of Pulte Group fell by 3.9 percent and shares of luxury housing construction company Toll Brothers fell by 2.7 percent.

Analysts stated that the reflection of the rise in long-term bond yields on mortgage rates in the USA may negatively affect new home sales by reducing housing affordability.

Expectations regarding the Fed's monetary policy and the course of the US 10-year bond interest are expected to be decisive on the stock performance of real estate and housing construction companies in the coming period.

On the other hand, according to the Household Debt and Credit Report for the third quarter of 2026 prepared by the Fed's New York branch, mortgage (housing loan) debt continued to constitute the highest share of Americans' household debt.

The debt item in question increased to 13.37 trillion dollars in the third quarter.

Mortgage debt increased by $257 billion in this period compared to the previous quarter and by $302 billion on an annual basis.