The tumultuous market and falling rates are setting up a possible great trade in one group

Published Wed, Feb 26 202010:17 AM ESTUpdated Wed, Feb 26 20206:21 PM EST

(This story is for CNBC Pro subscribers only.) Long-maturity bond rates tumbled to record lows amid the monster sell-off triggered by the coronavirus fears. While most stocks have been battered on economic growth concerns, this environment can bode well for one specific group of stocks, Wall Street analysts said. The 30-year Treasury yield hit an all-time low of 1.79% on Tuesday, and along with that, the average rate on the popular 30-year fixed mortgage hit 3.34%, an eight-year low. Improved affordability is started to benefit U.S. homebuilders. "The plunge in the 30-year treasury rate ought to boost mortgage refinancing while a strong dollar doesn't hurt earnings," Sean Darby, Jefferies' global equity strategist, said in a note. "Moreover, the [housing] sector is relatively 'political risk free' meaning that it should be a core holding for investors. We retain a bullish disposition towards the S & P 500 homebuilders." Some traders have attributed part of the recent volatility in the market to Senator Bernie Sanders' surge in the polls. Some investors think election uncertainty could weigh on the market through November. Data out Wednesday showed mortgage applications to purchase a home increased 6% last week and were 10% higher annually. Refinance volume will likely increase this week as mortgage rates dipped on the fast-spreading coronavirus. "Given the recent doom and gloom, we could use a feel good story. Enter housing," Ethan Harris, Bank of America's global economist, said in a note. "We still see a room for further gains in new home sales, as improving housing affordability and home buying sentiment should continue to support the housing market in the near term." Some of the stocks in the sector are up big this year and are holding up well during the market turmoil. D.R. Horton surged more than 10% in 2020 and have only dipped 1.8% this month. Lennar has also been a big winner, with the stock rising 19% this year and remained unfazed in February. Pulte is also outperforming the broad market in recent months. The stock is up 11.7% in 2020, versus the S & P 500's more than 3% loss. Jefferies analysts don't cover these specific names, but many others on Wall Street recommend buying these stocks. More than 60% of the analysts covering D.R. Horton have a buy rating, while nearly 70% of Lennar analysts give a buy recommendation, according to FactSet. "While the homebuilders have had a good run over the past year, the sector has unique characteristics such as its homogenous US sales and improving affordability that are missing in other S & P 500 sectors," Darby said.

A contractor views the construction site of a residential building in New York.

Victor J. Blue | Bloomberg | Getty Images

(This story is for CNBC Pro subscribers only.)

Long-maturity bond rates tumbled to record lows amid the monster sell-off triggered by the coronavirus fears. While most stocks have been battered on economic growth concerns, this environment can bode well for one specific group of stocks, Wall Street analysts said.