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Homebuilder stocks fall on weak October new home sales

Published 26/11/2024, 17:08
© Reuters.

On Tuesday, U.S. homebuilders saw their shares decline following the release of new home sales data for October, which fell significantly short of market expectations. The report, issued by government sources, indicated that sales of new single-family homes decreased by 17% to an annualized rate of 610,000 units, the lowest level in almost two years. Analysts had predicted a figure of 725,000.

The drop in sales was influenced by the impact of Hurricanes Helene and Milton, which disrupted the housing market in the Southeast, the largest housing region in the country. Sales in the South plummeted by 28% to 339,000, marking the slowest pace since April 2020. While sales also declined in the West, they increased in the Northeast and Midwest.

Amidst the overall decline, the median sale price of new homes surged to $437,300 in October, reaching a 14-month high. This increase in price is partly attributed to the shift in sales away from the South, where home prices are typically lower.

The housing market's brief resurgence in September, spurred by a temporary dip in mortgage rates, did not continue into October. Mortgage rates have started to rise again as investors anticipate potential inflation and higher budget deficits under the incoming administration of President-elect Donald Trump.

Affected homebuilders included Lennar Corp. (NYSE: NYSE:LEN), PulteGroup (NYSE: NYSE:PHM), D. R. Horton (NYSE: NYSE:DHI), Toll Brothers (NYSE: TOL), Beazer Homes (NYSE: NYSE:BZH), Meritage (NYSE:MTH) Homes Corporation (NYSE: MTH), and SPDR S&P Homebuilders ETF (NYSE: NYSE:XHB), with stock prices falling between 1% and 3%.

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