US homebuilder stocks take a hit from housing data

By Nick Carey

CHICAGO, Dec 28 (Reuters) - U.S. homebuilder stocks slid on Friday following the release of government data that showed the housing sector's woes continuing as new home sales hit a 12-year low in November.

Homebuilder stocks D.R. Horton Inc (DHI.N), Pulte Homes Inc (PHM.N), Beazer Homes (BZH.N) and KB Home (KBH.N) were all off more than 3 percent in trade on the New York Stock Exchange after the data came out and the Dow Jones Construction Index .DJUSHB was down more than 2 percent.

"The end (of the downturn) is not yet here so the data does not come as a surprise," said Robert Millikan, director of fixed income at BB&T Asset Management. "We think it could be another six months before home sales hit bottom."

"Housing probably won't be a positive for the economy until 2009," he added.

The government report released early on Friday showed that sales of new single-family homes fell 9 percent to an annual rate of 647,000 in November from the downwardly revised figure of 711,000 in October. Analysts polled by Reuters had expected a seasonally adjusted annual sales rate of 720,000.

"Our sense is that it still has a way to go and that we haven't reached the bottom yet," said Mike McGarr, a portfolio manager and analyst at Portland, Oregon-based Becker Capital Management. "The fundamentals are still deteriorating and for things to improve we would like to see lower home prices and lower mortgage rates to help shift some of the inventory out there."

Toll Brothers (TOL.N) shares were down 23 cents or 1.13 percent at $20.12, Meritage Homes (MTH.N) stock was down 22 cents or 1.44 percent at $15.08, Ryland Group Inc (RYL.N) was off 59 cents or 2.15 percent at $26.88 and Lennar Corp (LEN.N) was off 37 cents or 2.09 percent at $17.31.

Hovnanian Enterprises Inc (HOV.N) was down 4 cents at $6.90.

The Dow Jones Construction Index is now trading more than 70 percent down from its lifetime high of 1120.47 reached on July 20 2005.

"We continue to watch the homebuilder stocks as they are looking increasingly attractive," Becker Capital Management's McGarr said. "But we will probably stay away from them for some time as we suspect there are more impairments and write-downs to come."