The average rate on the 30-year fixed mortgage increased by 9 basis points to 7.13%, the highest since July 1, according to Mortgage News Daily.

Housing stocks, including Lennar, D.R. Horton, and PulteGroup, fell sharply, with declines of more than 4% in midday trading.

Retailers Home Depot and Lowe's also experienced declines of more than 3% each.

Mortgage rates have been rising steadily since hitting a low of 6.11% on September 11, despite a recent rate cut by the Federal Reserve.

The National Association of Realtors reported a 7% increase in pending home sales in September compared to August, attributed to increased housing supply.