Home builder stocks have maintained momentum even as mortgage rates have gained. That may not last.

As Treasuries have sagged and yields have risen, housing "has held up remarkably well in the face of these higher yields," 22V analyst Jeff Jacobson wrote in a note. But history suggests that outperformance could have an expiration date, he says.

Housing stocks are tethered to bond movements through the cost of mortgage financing. When long-term Treasury prices drop, yields, the basis of mortgage pricing, move higher. Usually, mortgage rates go up, buying a house gets more expensive, and demand takes a hit.

The recent Treasury rout hasn't helped mortgage rates. Monday's average fixed 30-year mortgage rate was 6.73%, according to Mortgage News Daily's survey-up from levels around 6.5% as recently as the end of June. The iShares 20+ Year Treasury Bond exchange-traded fund was on track Monday for its lowest close since 2004, according to Dow Jones Market Data.

The driver behind Monday's gain in financing costs was "familiar," Mortgage News Daily COO Matthew Graham wrote in a blog post. "Escalation in U.S./Iran tensions is pushing fuel prices higher and bond yields continue to correlate. Bond yields correlate with consumer interest rates with near perfection."

The iShares U.S. Home Construction ETF, which tracks companies related to the home building industry, was down less than 1%, to $97.84, in morning trading, according to Dow Jones Market Data.

Investors looking for a bright spot didn't find it in home builder sentiment for August, which the National Association of Home Builders released Monday. The latest survey "continues to show signs of weakness in the home building market," Robert Dietz, the National Association of Home Builders' chief economist, said in a statement. It was the 16th straight month with a confidence index reading below 40, representing an overall poor read of building conditions by builders, the trade group said.

In spite of the choppy environment for home-buying, the fund is positive on the year. Even as Treasury yields have gained, the construction fund is up from its 2026 lows in May, 22V's Jacobson notes.

Examining the recent history of the spread between the builders fund and the Treasury fund suggests builder stocks might not be out of the woods, even if Treasuries stop rising, according to the report. The last time the spread was roughly as wide, at the start of the year, ended when builders dropped roughly 22% from their February highs through March. A similar decline followed a wide spread between the two funds in the fall of 2025, he wrote.

"In both instances, when we saw the spread move back lower, it was the led by the home builders dropping sharply," he wrote. "Therefore, we could see another case of ITB declining even if yields don't move up meaningfully from here."