Here’s why home-builders’ shares are tumbling this year

Housing market data hasn’t been encouraging

National /
Aug.August 29, 2018 04:00 PM

Toll Brothers’ Doug Yearley and a home under contruction (Credit: Getty Images and iStock)

Home builders are lagging behind the broader market.

As the stock market returned to all-time highs and consumer confidence is strong, shares of home builders have taken a beating, the Wall Street Journal reported.

Toll Brothers has tumbled 23 percent this year while Lennar Corp. slid 17 percent. PulteGroup and D.R. Horton are down 14 percent and 11 percent, respectively. On the other hand, the S&P 500 has climbed 8.4 percent this year.

The challenge comes amid unencouraging housing data. Even as average home prices in major metropolitan areas have slowed, buyers aren’t flocking to the market, the report said. Existing-home sales have fallen for four straight months.

At the same time, buyers are facing limited inventory and rising mortgage rates. Prices for starter homes are the highest they’ve been since 2008, according to a previous report. In the second quarter, first-time buyers needed nearly 23 percent of their income to afford a typical entry-level home — up from 21 percent a year earlier.

But some are hoping it’s a temporary blip.

“Confidence is soaring to new heights which makes us bullish on growth and forecasts that this expansion may indeed shatter records for longevity next summer,” said Chris Rupkey, chief financial economist at MUFG, told the Journal. “The consumer says the economic times we live in is better than you think.” [WSJ] — Meenal Vamburkar

 

Related Articles

arrow_forward_ios
Jason Rabin and 70 Cobb Road, Water Mill, NY (Google Maps, LinkedIn)
Southampton compound sells for $118.5M
Southampton compound sells for $118.5M
John Gilbert (Getty Images, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
Rudin COO and tech chief John Gilbert to step down
Rudin COO and tech chief John Gilbert to step down
The cryptonaires will see you now
The cryptonaires will see you now
The cryptonaires will see you now
TENNY Policy Director Martha Star and New York City Comptroller Brad Lander (NYU Wagner, New York City Comptroller)
Last Stand: Property tax reformers recruit Lander to lawsuit
Last Stand: Property tax reformers recruit Lander to lawsuit
Zillow senior economist Jeff Tucker (Zillow, iStock)
US housing market up a historic $6.9T in 2021: Zillow
US housing market up a historic $6.9T in 2021: Zillow
Tyler Whitman, licensed real estate salesperson, The Whitman Team @ Triplemint; and 43 Garden Street (Corcoran, Triplemint, iStock)
“Million Dollar Listing” star buys instead of selling
“Million Dollar Listing” star buys instead of selling
Gary Beasley, chief executive officer and co-founder, Roofstock (Roofstock, iStock)
Roofstock ramps up iBuying, even with tenants in place
Roofstock ramps up iBuying, even with tenants in place
Sam Zell with a RVC Outdoor Destinations site (Getty, RVC)
Sam Zell’s Equity Lifestyle Properties invests $147M in manufactured homes
Sam Zell’s Equity Lifestyle Properties invests $147M in manufactured homes
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...