Mortgage Rates Are Moving the Wrong Way. I’m Buying These 3 Housing Stocks Anyway.

Mortgage rates had cooled off a bit as we were heading into 2026, but they have moved in the wrong direction since then. The average 30-year fixed-rate mortgage now has an interest rate above 7%, and home prices haven't exactly cooled off in many markets across the U.S.

I won't sugar-coat it. This is a bad backdrop for housing stocks. Homebuilders are having to spend heavily on buyer incentives, mortgage origination volumes are low (especially for refinancing), and housing affordability was already stretched before mortgage rates started to rise again.

Image source: Getty Images.

However, there are some housing stocks that look very attractive right now for investors with a 5-10-year time horizon. Here are three in particular I own, and I'm buying more of.

3 beaten-down housing stocks I'm buying now

1. Dream Finders Homes

Dream Finders Homes(NYSE:DFH) is based in Jacksonville and primarily focuses on the Sun Belt markets. It uses a land-light model: it holds purchase options on lots but doesn't actually buy any land until it's ready to build, which allows it to operate with less capital tied up. Of course, the business isn't without its struggles, but it continues to deliver strong profits, and at a valuation of just 8.4 times earnings, it could be a bargain for those who can wait out the bad times.

2. Rocket Companies

With mortgage rates spiking, it isn't surprising that Rocket Companies (NYSE:RKT)isn't seeing much growth right now. At least, not organic growth. Most of the increase in its origination volume is from its 2025 acquisitions of Redfin and Mr. Cooper.

However, one important concept is that great businesses use the bad times to gain market share, and that's exactly what Rocket is doing. The company's share of the purchase-mortgage market hit a record 6.2% in the second quarter, and it now holds 14.3% of the refinancing market, also an all-time high. Redfin mortgage leads more than doubled year over year, and the company is well-positioned to thrive when the housing market eventually normalizes.

3. Walker & Dunlop

Walker & Dunlop (NYSE:WD)is a commercial real estate finance company focused on multifamily housing. Similar to Rocket, Walker & Dunlop is taking a share in an awful market. Its share of government-sponsored multifamily loans (like HUD and Fannie Mae) is nearly 15%, up 350 basis points year-over-year. And although the property sales and financing sides of the business are agonizingly slow right now, the company has a $146 billion loan-servicing portfolio that generates steady revenue even in a slow market.

To be sure, there's a lot to dislike, such as the company's $23 million in legacy fraud-investigation charges in the second quarter, with more expected in the third. But this is a well-run company that is executing well in a terrible environment -- plus it pays a 6.5% dividend yield while you're patient with the market's turnaround.

Matt Frankel, CFP® has positions in Dream Finders Homes, Rocket Companies, and Walker & Dunlop. The Motley Fool has positions in and recommends Dream Finders Homes, Rocket Companies, and Walker & Dunlop. The Motley Fool has a disclosure policy.