NEW YORK (
) -- CNBC's
picks for homebuilder stocks have edged lower after Wednesday's disappointing news on new home sales ahead of the holiday weekend.
"If this trend persists, the homebuilding sector will continue to face difficult challenges as we head into 2010," writes CreditSights in a note released Thursday. "This is especially worrisome as government support measures enacted over the past year begin to dissipate during 2010 in the face of high mortgage delinquencies and foreclosure levels that continue to rise at alarming rates."
are trading at $14, down 0.1%, and
is down 0.9% to $20.40 Thursday morning after the Census Bureau announced on Wednesday that the seasonally adjusted annual rate of new home sales plummeted 11.3% to 355,000 in November compared to the month before.
Consumers are apparently still taking their time following an extension of a deadline for first-time buyers to qualify for a tax credit.
CreditSights sees "shadow inventory" slowly leaking into the market -- for example, despite actual closings of 472,000 in November (not seasonally adjusted), existing inventory only fell by 47,000 as the inflow of new inventory was much greater than closings.
CreditSights writes that even if the economy returns to growth and nonfarm payrolls turn positive, it could still take years for the housing sector, especially the homebuilding industry, to recover to normal operating conditions due to expected trends in housing demographics, employment growth and mortgage delinquencies and foreclosures.
On Tuesday's CNBC
Jon Najarian said he believed there was still more upside to the homebuilder trade as federal lawmakers last month extended a first-time home buyer tax credit that was originally scheduled to expire on Nov. 30; the new expiration date is the end of April 2010.
participants took on a bullish view of home goods and home-improvement retailers, including
Bed, Bath and Beyond
, which were both approaching 52-week highs.
-- Reported by Andrea Tse in New York
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