Rally over? Homebuilder stocks' big gains may have already priced in Fed rate cut

Homebuilder stocks are having a banner year, outpacing the broader market on a wave of optimism that mortgage rates will fall and juice home sales. The S&P Composite 1500 Homebuilding Index, which includes Lennar, D.R. Horton, KB Home and other stocks, is up about 29% so far this year while the benchmark S&P 500 has risen about 18%. The sector typically notches gains in the months surrounding the start of a Federal Reserve rate cutting cycle, as it did on Wednesday. But there are risks to the recent rally, analysts say.