NEW YORK ( TheStreet) -- The already-struggling housing market has another 15% decline in home prices already priced in, according to Stifel Nicolaus analyst Michael Widner.
The analyst explained that most homebuilders, including Toll Brothers (TOL - Get Report), which posted a 54% quarterly profit rise though revenue missed expectations, are trading at unusually low multiples because of market expectations for "a further 15% decline in national home prices by our estimates." Widner had a hold rating and $15.35 price target on Toll Brothers shares following its earnings report Wednesday morning, Homebuilders are clearly in a rut and signs for near-term improvement are few. Data released Tuesday showed that sales of newly built homes dipped 0.7% in July -- the third consecutive month of declines -- to a five-month low.
"Unfortunately, none of the data we see suggest that there will be a significant turnaround anytime soon," Mike Schenk, vice president of economics and statistics with CUNA, told TheStreet recently. "While mortgage interest rates are near all-time lows and housing affordability is near all-time highs, consumers remain cautious, builders remain dejected ... and permit activity suggest very little new construction on the horizon."