Real Estate

Homebuilder Stocks Rally About 4% as Yields Fall, Even as September Construction Spending Drops 1.9%

Homebuilder shares rose about 4% by midday Monday as Treasury yields fell, while Census data showed September construction spending dropped 1.9% on a 5.5% fall in residential outlays.

Nov 02, 2026 - 12:22

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Shares of U.S. homebuilders rose sharply on Monday, November 2, 2026, as Treasury yields and oil prices fell, even as a government report showed construction spending declined in September on a steep drop in residential outlays. As of about 12:15 p.m. ET, the iShares U.S. Home Construction ETF was up about 3.9% at roughly $96.39 and the SPDR S&P Homebuilders ETF was up about 3.4%, according to Yahoo Finance market data.

Builder shares move higher

The gains were broad. D.R. Horton was up about 3.6% at $151.32, Lennar about 4.2%, PulteGroup about 4.1%, Toll Brothers about 4.6%, NVR about 4.8% and KB Home about 4.4% at midday, Yahoo Finance data show. Home-improvement retailers also advanced, with Home Depot up about 2.8% and Lowe's up about 3.1%. The Vanguard Real Estate ETF, a broad fund of real estate investment trusts, rose a more modest 0.8%.

Manufactured-home builder Cavco Industries gained about 7.1% to around $663, extending a rally that began Friday. Cavco shares rose 13.11% to close at $619 on Friday after the company reported fiscal second-quarter revenue up 17.9% from a year earlier to a record $656.4 million and diluted earnings of $7.17 a share, above analysts' estimates of about $5.52, International Business Times reported. AlphaStreet reported that Cavco reached $667.72 on Monday as peers including Skyline Champion and Meritage Homes also rose.

The 10-year Treasury yield, a benchmark that mortgage rates tend to follow, fell to about 4.88% from 4.93% at Friday's close, according to Yahoo Finance data. Oil prices dropped about 7% on hopes for diplomacy between the United States and Iran. At 10:02 a.m. ET, consumer discretionary was the best-performing S&P 500 sector and energy was down more than 2%, Reuters reported.

Construction spending falls 1.9%

Construction spending in September was estimated at a seasonally adjusted annual rate of $2,186.1 billion, 1.9% below the revised August estimate of $2,227.4 billion and 2.7% below September 2025, the U.S. Census Bureau said on Monday. During the first nine months of 2026, construction spending totaled $1,649.6 billion, 2.9% less than in the same period a year earlier.

Private construction fell 2.4% to an annual rate of $1,639.3 billion. Private residential construction dropped 5.5% to $848.8 billion from $898.0 billion in August, while private nonresidential construction rose 1.1% to $790.6 billion. Public construction spending slipped 0.1% to $546.8 billion.

New-home building was little changed. The release tables show spending on new single-family homes at an annual rate of $403.4 billion, flat from August and 2.4% below a year earlier, and new multifamily spending at $115.9 billion, up 0.1% for the month. RealtyWire calculated that the rest of private residential spending, the portion that includes improvements to existing homes, accounted for essentially all of the monthly residential decline. Census cautions that monthly changes in its seasonally adjusted series can be irregular.

Data centers and power keep growing

Private office construction, the category in which Census counts data centers, rose 5.5% in September to an annual rate of $145.6 billion and was 39.5% higher than a year earlier, the tables show. RealtyWire reported that data center spending alone ran at an annual rate of $96.5 billion in September, up from $88.8 billion in August and $50.7 billion in September 2025. Private power construction rose 1.2% to $171.7 billion and was 12.1% above its year-earlier level.

Other commercial categories were weaker. Private manufacturing construction slipped 0.3% to $167.2 billion and was 17.9% below a year earlier, and private commercial construction, which includes warehouses and retail buildings, eased 0.3% to $115.9 billion, down 4.4% from September 2025.

Borrowing costs and what comes next

The average 30-year fixed mortgage rate was 7.24% as of October 29, down from 7.32% a week earlier and up from 6.17% a year earlier, according to Freddie Mac's weekly survey. The 15-year fixed rate averaged 6.60%. Freddie Mac publishes its survey on Thursdays.

Traders saw about a 77% chance of a Federal Reserve rate increase in December, down from 80% a week earlier, according to CME Group's FedWatch tool, Reuters reported on Monday. The preliminary September construction figures are subject to revision, and Census said its October report is scheduled for December 1, 2026.