Disappointing New-Homes Sales Report Dents Homebuilders' Stocks

NEW YORK ( TheStreet) -- The foundations for the 11 homebuilders in the PHLX Housing Sector Index were shaken on Thursday on a report that sales of new single-family homes during June missed estimates.

Also on Thursday, earnings from homebuilders D.R. Horton (DHI) and PulteGroup (PHM) missed analysts' estimates. Since my post on June 18 covering the 19 stocks in the housing sector index, shares of D.R. Horton are down 6.6%, followed by Lennar (LEN), which is down 4.9%, and Toll Brothers (TOL), which is down 4.6%.

Bigger losses in the index come from Radian Group (RDN) and Owens Corning (OC), which are both down 14% since June 17. Radian provides private mortgage insurance and Owens provides insulation, roofing and siding.

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Let's take a look at three important housing data releases.

On July 16, the National Association of Home Builder Housing Market Index rose four points, moving above the neutral 50 to 53. The graph above shows this rise, but does not show the weaker-than-expected reading for single-family housing starts for June that were reported on July 17.

Single-family starts plunged 9% to a seasonally adjusted annual rate of just 575,000 units in June, back below the 600,000 threshold I have been tracking. Single-family starts continue to track below the normal 1 million to 1.2 million annual rate of production.

On Thursday, U.S. Census Bureau reported that new-home sales plunged 8.1% in June to a seasonally adjusted annual rate of just 406,000 units when analysts were expecting 510,000. The inventory of new homes is at a 5.8 month supply at 197,000 units in June.

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