Home builder earnings for 2015 and early 2016 continue to impress, and and they're logging gains in new orders. Still, their stock prices still get get kickstarted.
Marilyn Alva of Investor's Business Daily writes that home builders' share prices have fallen since the beginning of the year. Big builders Toll Bros., D.R. Horton, Lennar, and PulteGroup, are down 28%, 27%. 23%, and 14%, respectively. LGI Homes had a great performance last year, but this year it experienced a 16% drop.
“You have to believe the economy is going to expand to own a home builder (stock),” said Citigroup analyst Will Randow. “Investors are fearful. Everyone, including me, is looking for the canary in the coal mine. I don’t think we’ve seen it yet.”
“When the stock market goes down, home builders go down even further. When the economy sneezes, the builder group catches a cold,” said Brad Hunter, chief economist at the Hanley Wood subsidiary Metrostudy, which studies the homebuilding industry.