What Happened?
A number of stocks fell in the afternoon session after mortgage rates climbed to a one-month high, fueling concerns about housing affordability and future demand.
The average rate on a 30-year fixed-rate mortgage stood at 6.61%, a notable increase that directly impacts the purchasing power of potential homebuyers. This spike in borrowing costs was linked to a recent surge in inflation and geopolitical uncertainty.
When the Federal Reserve halts cuts to its benchmark interest rate, the rise in mortgage rates creates a challenging environment for home construction companies. Higher financing costs can deter buyers, potentially leading to a slowdown in new home sales and negatively affecting the sector's revenue and growth outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Home Construction Materials company Builders FirstSource (NYSE: BLDR) fell 4%. Is now the time to buy Builders FirstSource? Access our full analysis report here, it’s free.
- Home Construction Materials company JELD-WEN (NYSE: JELD) fell 4.4%. Is now the time to buy JELD-WEN? Access our full analysis report here, it’s free.
Zooming In On JELD-WEN (JELD)
JELD-WEN’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 5.4% on the news that investors looked past a weak first-quarter earnings report and focused on the company's raised full-year revenue forecast.
The door and window manufacturer reported disappointing first-quarter results, with revenue falling 7% to $722 million and adjusted EBITDA plunging 72% compared to the same period in the previous year. The company's earnings per share also significantly missed analyst expectations.
Despite the poor quarterly performance, JELD-WEN increased its full-year net revenue guidance to a range of $3.05 billion to $3.2 billion. This optimistic outlook, along with a significant improvement in its North American on-time delivery rate, appears to have encouraged investors. The rally occurred even as some analysts reacted negatively to the report, with UBS cutting its price target on the stock from $3 to $1.60.
JELD-WEN is down 41.3% since the beginning of the year, and at $1.46 per share, it is trading 78.5% below its 52-week high of $6.76 from September 2025. Investors who bought $1,000 worth of JELD-WEN’s shares 5 years ago would now be looking at only $52.08.
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