Three Home Sales

Keep in mind that these figures do not include taxes, which could add at least $400 a month to the payment, oil prices (which are 100% higher than they were in 2003), electricity, heat, water or home insurance. This could easily add $800 to the payments; when you add the other monthly expenses such as cable, car insurance and food to that, it could total $4,000.

That's roughly $50,000 a year, after taxes, just to own a home in today's marketplace and pay other living costs -- with $94,400 used as a down payment (20% of $472,000).

So who does this hurt? Mortgage lenders, home improvement stores and retailers.

Put Countrywide to the Side

Because of the higher mortgage rates, I believe fewer homes will be purchased over the next 12-18 months. This could have a major impact on Countrywide Financial, which derives 50% of its profits from mortgage banking and is considered the largest U.S. independent residential mortgage lending firm.

Countrywide does hedge against inflationary risk, but this just makes it a best-of-breed stock in a declining industry. This is no reason to own the shares here, and I'd sell them now because higher interest rates will reduce mortgage activity, resulting in lower home prices and eventually lower profits.

Looking Down on Lowe's

Lowe's is another stock that could feel some pressure. The second-largest home improvement center in the U.S. is a one-stop shopping place for new homebuyers and homebuilders. Despite the largest homebuilders calling for a slowdown in the national and local housing market and losing anywhere from one-third to one-half of their market value, shares of Lowe's are up 5% this year.

A slowdown in the real estate market will lead to fewer home improvements. After reviewing Lowe's first-quarter results announced on May 22, the trend may have begun, with management slightly lowering its guidance for the second quarter. There could be downward revisions within the next three to six months from sell-side analysts as this trend persists, and shares should be sold here.

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In keeping with TSC's editorial policy, Frank Curzio doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Frank X. Curzio is a research associate at TheStreet.com, where he works closely with Jim Cramer. Previously, he was the editor of The FXC Newsletter and senior research analyst for Greentree Financial.

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