Real EstateJul 4, 2024
Wall Street Analysts Slam The Door on Homebuilders Over Housing Challenges
Equity Research
Daniel Schoester
The housing market’s hot streak is cooling as Wall Street turns a cold shoulder. Homebuilder giants Lennar and D.R. Horton are facing analyst downgrades. This follows Lennar’s stumble last month when it fell short of earnings expectations. Analysts are now the least bullish on since 2017, a stark contrast to its stellar 2023 performance.
- Citigroup blamed softness in housing starts, sales, and prices — while Raymond James analysts expressed concerns with Lennar’s exposure to the softening Florida market.
- On Tuesday, declined 1.6% following the rating cuts, with stumbling 1.3% behind.
Party’s over? Homebuilder shares were the life of the party in 2023, with the S&P Composite 1500 Homebuilding Index returning 81%. However, with rates at generational highs, the house party seems to be coming to an end. Analysts suggest the homebuilding sector is “long overdue for a material valuation re-rating,” (BBG) which could provide the industry with a serious reality check.
