Two stocks forming bullish chart patterns are also set to get a boost from thawing housing market

The housing market, previously constrained by high interest rates, is poised for a recovery driven by anticipated lower mortgage rates, signaling a new era for housing-related activity. This outlook positions Home Depot (HD) and Rocket Companies (RKT) as key beneficiaries. HD is expected to capture significant pent-up home improvement demand, potentially adding $10-15 billion in sales, while Rocket Companies, as the largest mortgage originator, stands to gain substantially from renewed mortgage activity, a view reinforced by ValueAct Capital's recent 9.9% stake. The market is already reflecting this optimism, though the pace of recovery remains contingent on interest rate trends.

Analysis

The market is beginning to price in a recovery in the U.S. housing sector, which has been suppressed by the Federal Reserve's aggressive rate-hiking cycle. This anticipation of lower mortgage rates is creating a bullish thesis for housing-related equities, with Home Depot (HD) and Rocket Companies (RKT) identified as primary beneficiaries. For Home Depot, the argument centers on unlocking an estimated $50 billion in pent-up home improvement demand, which could translate into $10–15 billion in additional sales for the company, lifting its growth rate substantially above the typical 3–4% annually. This fundamental outlook is supported by bullish technicals, including a "Golden Cross" and a developing "cup-and-handle" pattern, with an RSI in the 60s suggesting accumulation is underway but not yet overbought. Rocket Companies is presented as a more direct, higher-beta play on rising mortgage activity. As the largest U.S. mortgage originator by unit volume with a client recapture rate of 83%—more than triple the industry average—RKT is positioned to directly benefit from a thaw in home transaction volumes. The investment thesis is further validated by the recent disclosure of a 9.9% stake by activist investor ValueAct Capital and the company's strategic M&A activity. However, RKT's performance is explicitly tied to the trajectory of interest rates, making it highly sensitive to any potential upside inflation shocks that could delay Fed easing.

Key Decisions for Investors

• Investors with a bullish conviction on declining interest rates should consider long exposure to the housing sector, with Home Depot offering a stable, retail-focused play and Rocket Companies providing a higher-beta, pure-play on mortgage origination.
• For Home Depot, the combination of a potential $10-15 billion sales boost from pent-up demand and bullish technicals suggests the stock is well-positioned for an uptrend; the rising 50-day moving average can serve as a key level for risk management.
• Rocket Companies represents a compelling but more volatile opportunity, validated by a major activist stake, whose success is directly contingent on falling mortgage rates; investors should monitor inflation data and Fed policy closely as key risk factors.
• Given the recent price appreciation, prudent entry points could be sought on pullbacks, such as a potential dip to the $19 support level for RKT, while longer-term investors could utilize the $12 price point as a critical risk-management threshold.