Analyst Downgrades Homebuilding Stocks as 'Hope Trade' Won't Last (TOL) (LEN) (PHM) (RYL) (KBH)

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Raymond James' Buck Horne lowered his investment ratings on five stocks in the Homebuilding sector Monday morning following a sharp rally in the group since November. The analyst believes the recent upside can be attributed to the "Hope Trade" which seasonally occurs around the new year but does not last.

Buck downgraded shares of Toll Bros. (NYSE: TOL), Lennar (NYSE: LEN) and Pulte (NYSE: PHM) from Outperform to Market Perform and shares of Ryland (NYSE: RYL) and KB Home (NYSE: KBH) from Market Perform to Underperform.

The Raymond James analyst is modeling for soft homebuilding sales during spring. Buck also called the mortgage market "dysfunctional."

Investors are selling the stocks Monday afternoon following the downgrades: KB shares are down more than 4 percent, Lennar shares are down 3.6 percent, Ryland shares are down 3.2 percent, Toll shares are down 2.6 percent, and shares of Pulte are down just 1 percent.

The SPDR S&P Homebuilders ETF (NYSE: XHB) is down 0.5 percent at last check.

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