Despite Market Upswing, Home Building Stocks Continue Decline
On Monday, Standard & Poor’s followed up its downgrade of U.S. government debt with a downgrade of 10 of the 12 Federal Home Loan Banks (NYSE:KBE) to AA+ from AAA. Additionally, the agency lowered its rating on Fannie Mae and Freddie Mac to AA+ from AAA. At-risk state governments are likely the next to take a hit to their credit ratings. In the meantime, home-builder stocks (NYSE:XHB), falling yesterday, have been continuing the trend, despite the general market upswing as many stocks pare losses. While a few home-building stocks are cutting some of Monday’s losses, many investors are fleeing as they see higher home prices and lower construction demand in the short term. Plus, the lowered S&P ratings are expected to translate into higher costs for home buyers, and higher rates for renters and lenders.
Here’s a look at the performance of a panel of popular home-building stocks:
Lennar (NYSE:LEN) +1.06%, KBH Home (NYSE:KBH) +3.15%, PulteGroup Inc. (NYSE:PHM) -0.65%, D.R. Horton Inc. (NYSE:DHI) -2.30%, The Ryland Group (NYSE:RYL) -0.61%, Toll Brothers Inc. (NYSE:TOL) -0.78%, M.D.C. Holdings Inc. (NYSE:MDC) +1.92%, Cornstock Homebuilding (NASDAQ:CHCI) +17.09%, M/I Homes Inc. (NYSE:MHO) -4.34%, and NVR Inc. (NYSE:NVR) -3.18%.