Home loan financing costs unmoved at one-year high, mortgage demand slips

But all economic data is viewed through the rearview mirror; housing stocks indicate where investors expect the sector to be six months to a year down the road.

With that in mind, investors' view of the sector is deteriorating.

While both the S&P 1500 Homebuilding Index .SPCOMHOME and the PHLX Housing Sector Index .HGX beautifully outperformed the broader market in the first two months of the year, that advantage evaporated in March when the U.S.-Israeli war on Iran pushed interest rates higher, taking mortgage rates with them.

However, following a pull-back in long-dated debt yields and a favorably received earnings report from home improvement retailer Lowe's LOW.N, the HGX is enjoying a nice rally on Wednesday.

Including today's move, the SPCOMHOME is down 1.3% so far this year, while the HGX has reclaimed positive territory, up 2.5%. Still, by comparison, the S&P 500 .SPX has advanced 12.4% year-to-date.