The entire homebuilding sector got a lift Tuesday when one analyst upgraded D.R. Horton ( DHI) and M/I Homes ( MHO) and downgraded Pulte Homes ( PHM). Credit Suisse analyst Ivy Zelman says D.R. Horton, the country's largest homebuilder, will be able to ride out the slowing housing market better than some of its competitors because of its affordable-housing product. She upgraded the builder to outperform from neutral. "Given DHI's propensity to rely on its lower-cost platform to drive volume harder than its peers, we believe the company is better situated to mitigate earnings decline than others in the group," Zelman wrote. Zelman expects D.R. Horton to post 2007 EPS of $5.28, which represents a 3% drop from her 2006 estimate. The projection compares favorably, however, to her expectations for an overall 12% decrease in EPS for the group. Her new price target on the stock is $42. D.R. Horton shares rose 4.5% in morning trading to $32.97. Zelman also upgraded M/I Homes, which has a heavy reliance on the Midwest, to outperform from neutral. With M/I Homes ramping up its communities in Florida and the mid-Atlantic, she expects the company to benefit from a mix shift, even as overall demand remains pressured. Zelman also believes the stock's low recent valuation -- 5.6 times forward earnings -- already reflects the company's greater than average exposure to the troubled Midwest markets, which represented 40% of the company's earnings before interest, taxes, depreciation and amortization last year. Zelman expects M/I Homes to post 2007 EPS of $6.61, down 10% from her 2006 estimate. Her price target is $56. M/I Homes shares recently were up 7.2% to $42.97. Zelman downgraded Pulte to neutral from outperform, noting that she is worried the company will have difficulty increasing revenue at a rate fast enough to offset margin pressure. Zelman also expressed concerns about Pulte's exposure to the red-hot Phoenix housing market, which represented 15% of EBITDA last year. For 2007, Zelman expects Pulte to post EPS of $5.17, which would be down 15% from her 2006 estimate. Her price target is $42. Pulte shares rose 1.8% to $37.27 in morning trading. Other builders were boosted by the report. Centex ( CTX) shares jumped $2.03, or 3.3%, to $63.56; Toll Brothers ( TOL) was up $1.07, or 3.4%, to $32.72; Ryland ( RYL) gained $2.04, or 3.1%, to $68.13; and KB Home ( KBH) rose $1.46, or 2.3%, to $64.80.