Homebuilders Sink After Sell-Side Survey Shows Risk to Orders

(Bloomberg) -- Shares of homebuilders are getting wrecked after research firm Zelman & Associates downgraded several stocks in conjunction with a survey that implied risk to near-term order estimates.

The S&P Supercomposite Homebuilding Index fell as much as 4.6 percent for its largest loss in almost a month. The selloff has worsened through the session as investors await Wednesday’s Federal Reserve rate decision.

Uncertainty over interest rates and concerns over an potential housing downturn are spreading, according to the survey, which revealed “four consecutive months of slower-than-seasonal order activity," Zelman analyst Alan Ratner wrote. “Our recent proprietary Western markets reports also posting tepid growth.”

The firm downgraded to a hold rating each of TRI Pointe Group, Toll Brothers, and The New Home Company. TRI Pointe and KB Home are pacing losses in the homebuilder index, with plunges of more than 6 percent.

To contact the reporter on this story: Arie Shapira in New York at ashapira3@bloomberg.net

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Jeremy Herron

©2018 Bloomberg L.P.