Builder recovery hopes fall
Another downturn in shares of major home builders suggests that investors are giving up hope that the business will begin recovering this spring.
Builders’ stocks were broadly lower Wednesday, deepening their year-to-date losses.
Irvine-based Standard Pacific Corp.’s shares fell 61 cents to $19.90, the lowest since 2003.
Pulte Homes Inc. shares dropped 68 cents to $25.57, the lowest since 2004.
Among other builders, Lennar Corp. in Miami sank $1.30 to $40.98, nearing the 52-week low of $40.07 reached in July.
The stocks came under pressure after the National Assn. of Realtors cut its forecast for new-home sales in 2007. The group said it expected a 14.2% decline in sales this year from last year’s level, worse than the 9.8% drop it had estimated a month ago.
Robert Curran, who follows home builders at credit-rating firm Fitch Ratings, said in a report Wednesday that “pressures remain intense” on the industry.
“Though new- and existing-home data from the fall of last year to January 2007 implied that demand for single family homes was approaching stabilization, February and March information was somewhat contradictory and suggest that a bottom in housing metrics is not likely for some months yet,” Curran said.
One of the largest builders, Fort Worth-based D.R. Horton Inc., warned Tuesday that the spring selling season “has not gotten off to its usual strong start.”
Horton’s shares fell 37 cents to $21.33. They are down 19.5% year to date.
Ivy Zelman, a housing analyst at Credit Suisse, on Monday cut her rating on Horton’s shares to “underperform” from “neutral.” She made the same change in her rating on Bloomfield Hills, Mich.-based Pulte but raised her rating on Calabasas-based Ryland Group Inc. to “neutral” from “underperform.”
Ryland shares appeared to get a lift from Zelman’s change of sentiment: The stock rose 35 cents Monday and 2 cents Tuesday. But sellers took over again Wednesday, pushing the stock down 35 cents to $42.
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