With mortgage rates retreating and inflation abating, short sellers who’d been capitalizing on the three-month slump in homebuilder stocks may need to prepare for a rebound toward year-to-date highs.

The S&P Composite 1500 Homebuilding Index has surged more than 20% in a bounce-back rally that started at the end of October and regained nearly all losses from the rout that began in July.

Reprinted courtesy of Norah Mulinda, Bloomberg and Carmen Reinicke, Bloomberg