Homebuilder stocks fell Monday after a closely followed builder sentiment index dropped to the lowest level since 1995.
Rising mortgage rates, affordability issues and the retreat of investors/speculators from the housing market hurt builders' outlook on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index for June. The index dropped four points from May to hit 42 in the latest report.
Among the biggest losers after the report Monday were
, with shares falling 4.9%; and
( TOA), down 4.8%. Shares of
dropped 3.3% and
, which last week joined a slew of other builders in
reducing its earnings guidance, shed 1.3%.
"We now expect new-home sales to be off by 13% from the record posted in 2005. Single-family starts, supported by large builder backlogs of unfilled orders and some continuing reconstruction in the wake of last year's hurricanes, should be down by about 9% from the 2005 record," said NAHB Chief Economist David Seiders in a statement.
"These forecasts naturally are subject to a considerable degree of risk," he added. "The downside risks include the potential for large numbers of sales cancellations and re-sales by the investor/speculator group as well as more aggressive tightening of monetary policy than we're assuming in our baseline forecast."
The decline in builder confidence was broad-based and registered in every region this month, the NAHB said.
On Tuesday, the government releases data on housing starts. Economists expect a 1.87 million annualized pace for May, up from 1.85 million a year earlier, according to