Homebuilders Slammed as New Home Sales Miss

November 28, 2012 10:25 AM EST
Shares of homebuilders are getting hammered early on Wednesday following the release of October new home sales data. The data showed a 0.3 percent drop in sales compared to an expected gain of 0.3 percent.

Immediately following the data print, shares of PulteGroup (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian Enterprises (NYSE: HOV), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), and KB Home (NYSE: KBH) all dropped, with HOV taking the brunt of the damage trading lower by over 5 percent.

Sector ETF, SPDR S&P Homebuilders (NYSE: XHB), is down 1.2 percent.

The violent reaction to the data shows investors are particularly sensitive to housing data, especially in light of healthy year-to-date gains in the sector and what some say is stretched valuations in homebuilder stocks.

On an annual rate bases, seasonally adjusted new home sales totaled 368,000-units, while September new homes sales figures were revised down 20,000 to 369,000 units. Economist predicted a unit-rate of 390,000 in October.

The flattish figures suggest acceleration in home buying may be ebbing, though volatility is expected.

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