UPDATE 1-RESEARCH ALERT-Credit Suisse cuts 3 homebuilders

April 2 (Reuters) - Credit Suisse downgraded three homebuilders, including Pulte Homes Inc (PHM.N) and KB Home (KBH.N), saying it expects orders to be weak in the first quarter.

"We believe that those looking for recovery in the new home market will need patience, as we expect weak first quarter orders (down 45 percent on average) and see more risk with the stocks," analyst Dan Oppenheim wrote in a note to clients.

The analyst downgraded Pulte Homes, KB Home and MDC Holdings Inc (MDC.N) to "underperform" from "neutral".

Oppenheim said orders are expected to fall 49 percent at Pulte Homes and 50 percent at MDC in the first quarter, with a downside to the stocks of both homebuilders.

"New home sales likely to remain weak, recent optimism will likely fade," Oppenheim said.

While in the midst of a prolonged downturn, KB Home, the fifth largest U.S. homebuilder, had good news to share last week, posting a narrower-than-expected quarterly loss and a 26 percent rise in orders.

Despite a strong orders report last week, heightened expectations could be premature, Oppenheim said.

"KBH will likely find it difficult to maintain a strong order book going forward as other builders adjust their strategy to compete more directly," the analyst said.

New home sales will continue to be a smaller percentage of home sales due to the wide price gap between new home prices and foreclosure prices, Oppenheim said.

"The inventory of foreclosed homes owned by banks has continued to increase in key homebuilding markets, further pressuring prices and exaggerating the premium on new homes relative to existing homes, which will delay the recovery in new home sales." (Reporting by Eric Yep in Bangalore; Editing by Deepak Kannan)