Homebuilder stocks continue to bob
Economic woes, dropping mortgage indexes fuel concerns
Homebuilder stocks finished off the week rattled as housing-related data resulted in lower than expected market expectations.
Consumer sentiment on Friday fell to its lowest level since early this year, to 76.8 compared to 82.1 in August, due to unsteady economic news surrounding a military strike against Syria, according to analysts for Econoday.
On a similar note, the Mortgage Bankers Association released their weekly mortgage refinance and purchase index this week, with applications tumbling 13.5% from the previous week.
Such unsettling numbers and blows to consumer confidence have left many market analysts wondering if the housing recovery has taken a turn.
Golden Returns Management registered investment advisor Dave Kranzler wrote that the combination of fundamental data and the multiple technical signals of the Dow Jones US Home Construction Index prove that housing stocks can lose steam rather quickly, according to Seeking Alpha.
"Currently the purchase index is now dropping sharply and has been dropping sharply all summer, something which should not be occurring during the peak seasonal selling period," Kranzler explained.
He added, "What's even more troubling about this is that banks have become more lenient in terms approving mortgage borrowers who are purchasing homes. Thus from a fundamental perspective, it would appear that home sales are literally starting to collapse."
When taking a look at the HW 30 index — HousingWire’s exclusive index of stocks impacting the housing economy — D.R. Horton (DHI), Lennar Corp. (LEN) and Toll Brothers (TOL) under performed on Friday, down 1.14%, 1.20% and .62%, respectively.
D.R. Horton had a dramatic week compared to the other homebuilders, posting both peaks and valleys when compared to the New York Stock Exchange.
To put it into perspective, the company hit its week low Tuesday, dropping 2% in volume, and immediately corrected itself Wednesday, hitting a 1% volume high for the week.