M
ortgage rates have resumed their upward trend, reversing a brief decline following the Federal Reserve's rate cuts announcement. As of December 29, the 30-year fixed mortgage rate stands at 6.99%, up slightly from last week. Despite the Fed's efforts to lower interest rates, mortgage rates in the US are now increasing, influenced by rising long-term bond yields and renewed investor interest. The 10-year Treasury yield has been a key driver of this trend, reaching near a seven-month high after rising 4 basis points to 4.626%. This development defies conventional wisdom, as bond yields typically decrease when the Fed lowers its federal funds rate.

    The recent upward movement in mortgage rates may have reduced affordability for home buyers, but lower rates could be on the horizon if the Fed's December meeting indicates further cuts. A higher inventory of homes and subsequent price drops could also make it more attractive for first-time buyers to enter the market. As a result, investors may want to consider allocating part of their portfolio to promising stocks in the real estate sector.

    We've identified three such stocks with positive earnings estimate revisions over the past 60 days, each carrying a Zacks Rank #1 (Strong Buy) or #2 (Buy). These include CBRE Group, Inc. and ARMOUR Residential REIT, Inc., both of which have seen improvements in their current-year earnings estimates.