While they have made great strides in the past year, home-builder stocks have become volatile recently as investors deal with mixed economic housing data, rising mortgage rates, and, in the cases of a few overheated markets such as San Francisco, worries that the market is setting up for another painful collapse.

The sharp moves in builder stocks may not all point to fundamental misgivings about the strength of the housing market. Thursday’s selloff in homebuilder stocks was likely an overreaction because of investor edginess given the market’s lofty highs, said Greg Peterson, director of investment research at Ballentine Partners. But while homebuilder stock prices may be high, when you factor in earnings, they’re well below what they were in 2006, he noted.