A disappointing report for new home sales in October sure took a bite out of the homebuilder stocks today. The Census Bureau showed a 0.3% decline to 368,000 on an annualized basis. This was only about 21,000 homes short of the estimates, but the homebuilder sector has been priced for perfection. Perhaps a larger concern is that the median sales price fell to $237,000 in October versus $242,400 in September.
If you have followed the homebuilder sector, you probably knew that these have risen (and risen and risen) with the good news out of the housing sector. While these might not be priced quite for perfection, there is a lot of hot air that will come out of this sector if housing stalls.
Here are the reactions today in some of the key homebuilders:
- DR Horton Inc. (NYSE: DHI) is down “only” 1.2% at $19.36 against a 52-week range of $11.60 to $22.79.
- KB Home (NYSE: KBH) is down only 0.1% at $14.59 against a 52-week range of $6.17 to $17.40.
- Lennar Corp. (NYSE: LEN) is down 1.6% at $38.10 against a 52-week range of $17.50 to $39.33.
- PulteGroup, Inc. (NYSE: PHM) is down 2.2% at $16.73 against a 52-week range of $5.54 to $18.30.
- Ryland Group Inc. (NYSE: RYL) is down almost 2% at $33.07 against a 52-week range of $14.14 to $35.84.
- Toll Brothers Inc. (NYSE: TOL) is down only 0.2% at $32.04 against a 52-week range of $18.95 to $37.08.
It is hard to call this the start of a trend because housing is still doing well. That being said, most of these are up well over 100% from their 52-week lows and are barely down from recent highs. If this is the start of a trend then homebuilder stocks will lose a good amount of their luster.
JON C. OGG