Why Home Builders Can Easily Survive Higher Interest Rates

24/7 Wall St.

constructionInterest rates are rising and the 30-year mortgage just hit a 12-month high. Rising rates will eat up your spending power and erode the value of your fixed income investments. So, will that kill the home builders? Apparently not. Sterne Agee’s home builder analyst Jay McCanless has gone as far as to say that a near-term pullback in housing stocks actually may be a long-term buying opportunity.

24/7 Wall St. has been evaluating higher interest rates in many sectors this week, and there are some risks that higher rates could crowd other sectors. That is certainly true of the high-dividend mortgage REIT sector, and it can be true for the high-dividend utility sector as well.

Stern Agee’s favorite stocks in the home builder sector are Meritage Homes Corp. (NYSE: MTH), D.R. Horton (NYSE: DHI), Ryland Group Inc. (NYSE: RYL) and PulteGroup Inc. (NYSE:…

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