Homebuilding stocks are getting crushed as they take a direct hit from the rising interest rates rattling financial markets this month.

The iShares Home Construction exchange-traded fund, which includes homebuilding products and homebuilders, is down 27 percent since January. The SPDR S&P Homebuilder ETF is down 21 percent, also in a bear market. Both funds have fallen more than 3 percent in September.

The sector has become viewed as undesirable with the 30-year fixed rate mortgage rate hitting the crucial 5 percent level. In addition, the 10-year Treasury yield rose to a new seven-year high on Tuesday. The U.S. bond market was closed Monday for Columbus Day.

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