Monday, October 13, 2008

Stock Market Rally Leaves Most Homebuilders Behind

NEW YORK, Oct 13 (Reuters) - The broader market rally this morning bypassed most U.S. home builders on Monday after several analysts issued notes describing very stale order trends and weak traffic in the homebuilders field.

The Dow Jones U.S. Home Builders index was down as much as 1.3 percent in morning trading while the broader market was up about 5.5 percent.

It has been recently reported that sales center traffic at the weakest levels since January 2001, when he started his "Neighborhood Watch" report, which surveys 150 sales managers in 20 markets monthly.

The fourth quarter "may prove (to be) the weakest climate for new home sales since the production homebuilding business effectively began in the late 1940s," Reichardt wrote.
Toll Brothers Inc (TOL.N:) shares were both down -- Toll nearly 2 percent at $20 and Ryland as much as 4.9 percent at almost $19 -- after Credit Suisse analyst Dan Oppenheim downgraded both. Ryland was downgraded to "neutral" from "outperform" and Toll to "underperform" from "neutral."

Another hit to asset values as home prices continue to fall has not yet been factored into Toll's share price, making it too expensive "given its premium valuation and its high-end focus," wrote Oppenheim, who sees sees an additional 45 percent decline in raw land values and extremely weak order trends over the next several quarters.

One builder looked good though, as Oppenheim upgraded Meritage Homes Corp (MTH.N:) to "neutral" from "underperform," however, and its shares bucked the trend by rising as 14 percent, or $15.96.

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