Is Now the Time to Invest in Homebuilders Stock? Um, no...

National home builders are suffering from lower stock prices right now and some investors might think it's time to buy buy buy.

Forget it. While Centex, KB Homes and Lennar Corp., all of which have developments in Polk County, are suffering, now might not be the time to invest."Any time you start sector betting, you're concentrating your risk in one area," said Laura Hawley, a financial planner and vice president of Allen & Company in Lakeland.
On a national level, the home market isn't showing any signs of rebounding.Just 5.04 million homes were sold in September, down 19.1 percent from 6.23 million in September 2006.
This past week's home sales reports, released by the National Association of Realtors on Wednesday, sent builder stock prices tumbling.

Centex shares dropped 37 cents to $24.27. DR Horton Inc., one of the nation's largest builders, fell 49 cents, or 3.9 percent, to $12.22, while Lennar Corp. slid 37 cents to $22.07. Beazer Homes USA Inc. had shares decline 11 cents to $9.69."It is really just buyer beware," she said.Hawley likened the scenario to the dot com market bust in 2000."A lot of those companies that were blue chip stocks never recovered," she said. "It doesn't mean these companies are going to come roaring back like they were."

And when it comes to building new homes, it doesn't get much better. The Commerce Department reported Wednesday that construction of new homes fell 10.2 percent in September to a seasonally adjusted annual rate of 1.191 million units. The decline was more than double the 4.2 percent drop that analysts had been expecting and it pushed activity down to the lowest level since March 1993.

"I think the real estate market in general isn't done," Hawley said. "I think we still have a lot of weakness there."But Polk County, Florida is some ahead of the building bust curve. Contractors across the county pulled 271 new home permits last month, which is an 8.1 percent decline from 295 permits in September 2006. And while it is still the 19th consecutive month permit totals have declined, the lower decrease is encouraging. For more than a year, builders have sought some relief to the sluggish housing market.

KB Homes Taking a Big Hit as Sales Slump

LOS ANGELES (AP) - KB Home , one of the nation's largest homebuilders, swung to a loss Thursday, citing a deep deterioration in the housing market and warning the sales slump will likely extend into next year.

KB's financial results were released the same day the Commerce Department reported new home sales in August fell 8.3 percent from the previous month to the lowest level in seven years. "We expect housing industry conditions to continue to worsen through the end of the year and into 2008," said Jeffrey Mezger, KB's president and chief executive officer. "Our third-quarter results reflect the seriously challenging market conditions that prevail for homebuilders across most of the nation," he said. Los Angeles-based KB Home reported a loss of $35.6 million, or 46 cents per share, for the quarter ended Aug. 31, compared with a profit of $153.2 million, or $1.90 per share, in the year-ago period.

The company also said it took pretax charges of $690.1 million and $107.9 million to write down the value of unsold inventory and joint-venture holdings. KB shares rose 62 cents, or 2.6 percent, to $24.71. The homebuilding sector has been struggling as many would-be buyers wait for prices to drop further or struggle to qualify for mortgages that now carry tighter standards. That has left more homes on the market, forcing builders to lower prices and squeezing their profit margins.