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VOL. 42 | NO. 23 | Friday, June 8, 2018
The Latest: Shares in homebuilders fall ahead of Fed meeting
WASHINGTON (AP) — Homebuilders are taking a beating on Wall Street ahead of Wednesday afternoon's Federal Reserve meeting, where analysts are expecting a rate increase.
The Fed's rate hikes can translate into higher interest rates for credit card holders and homeowners with adjustable-rate mortgages or home-equity lines of credit.
The construction industry is already wrestling with rising costs for labor, material and available land. External factors, like rising gasoline prices, may also be putting the squeeze on potential buyers.
Fewer Americans signed contracts to buy homes in April due to a shortage of inventory. Mortgage rates had ticked down the past couple weeks, providing some relief for potential homebuyers.
But with a quarter-point hike expected from the Fed, that relief may be short-lived.
KB Home shares fell 6 percent. Meritage Homes Corp., PulteGroup, Lennar Corp. and Dr. Horton all slid around 5 percent. Materials companies and home improvement stores like Lowe's are also being pressured.
Mortgage rates remain historically low, but a combination of rising costs is weighing on the sector broadly.