Housing Data Taking Toll on Housing Stocks

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Photo by:Seven_Null7
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It has been a dismal couple months for homebuilders as poor data have spurred worries of another dip in housing.

Following a poor existing home sales number on Tuesday, yesterday’s new home sales data was even more disappointing. New home sales in May fell to a record low of 300,000 – far below expectations of 430,000 – and down nearly 33% from a downwardly-revised April number. Sales in the West region were particularly weak last month, dropping 53% from the prior month and falling 43% year-over-year.

Also frustrating for the housing industry: low interest rates haven’t spurred demand for mortgages. Despite 30-year mortgage rates falling to their lowest levels since May 2009 at 4.75%, mortgage applications declined 5.9% in the past week (as reported by the Mortgage Bankers Association yesterday). Refinancing applications dropped 7.3%, while mortgage applications for home purchases fell 1.2% in the week. The Mortgage Bankers Association’s purchase index now sits just off a 13-year low. Additionally, since the recent expiration of the Federal home buyer tax credit less than two months ago, the index has fallen in six of the last seven weeks.

Take a look at the drop in the major homebuilding stocks (all of which are at multi-month lows) since the tax credit’s expiration on April 30:

  • Hovnanian , down 42%
  • Standard Pacific , down 40%
  • KB Home , down 33%
  • Pulte Homes , down 31%
  • D.R. Horton , down 29%
  • Ryland , down 28%
  • Lennar , down 26%
  • Meritage Homes , down 26%
  • Toll Brothers , down 23%

The hefty declines haven’t been limited to just the builders. Lumber has plunged nearly 37% in just over seven weeks and is on pace for its worst quarter in 17 years.

Additionally, many housing-related stocks (construction materials, home improvement retailers/product makers) have also been hit hard over the past couple of months:

  • USG , down 39%
  • Masco , down 25%
  • Weyerhauser , down 22%
  • Lowe’s , down 19%
  • Vulcan Materials , down 18%
  • Eagle Materials , down 16%
  • Home Depot , down 13%

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