Lennar Corp (LEN)

Lennar Corp (LEN) stock plummeted by 5.76%, as well as other home builders, declined admist concerns about rising inflation and its potential impact on mortgage rates, which could weigh on housing demand.

• Inflation and Mortgage Rates: Higher-than-expected inflation data dashed investors' hopes for a June rate cut, leading to a shift in expectations regarding interest rates. The 10-year Treasury yield rose significantly, indicating a potential increase in mortgage rates. The average mortgage rate was 6.82% last week, according to Freddie Mac.
• Mortgage Demand and Economic Resilience: Higher rates were already affecting mortgage demand, with applications for home purchase loans at their lowest level since late February. Several Federal Reserve officials reiterated a patient posture on rate cuts, citing stubbornly high inflation and the economy's resiliency.
• Housing Costs and Rental Demand: Shelter costs rose 0.4% in March from the prior month and were up 5.7% from the year prior, contributing significantly to the monthly CPI increase. The median U.S. asking rent increased to $1,987 in March, up 0.8% from the previous year, leading to increased rental demand as home purchasing plans are delayed due to high monthly payments.

Lennar Corporation Class A Stock (LEN) dropped by 5.08% from $114.27 to $108.46 in the trading on Thursday October 12, 2023. The reason why LEN stock down today is due to mortgage rates hike. Homebuilding stocks are under pressure after the average 30-year fixed mortgage rate rose to a 23-year high of 7.67%, which weighs on housing demand. That is the headwind causing LEN stock down today.