Homebuilders Hurt By Downgrades

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Local homebuilders took another shot on the chin Monday morning after a Citi Investment Research analyst downgraded shares in homebuilders nationwide, saying the housing market is only going to get worse.


Shares in Los Angeles-based KB Home lost 5.5 percent to $20.49 in early trading Monday, after losing 13 percent last week amid a shaky holiday market. Calabasas-based Ryland Group Corp. also dropped 5 percent to $20.70, after shedding 16 percent last week.


Analyst Stephen Kim said while prices of new homes have dropped, prices of previously owned homes have “far to fall,” adding in his report that “the recent deterioration in the broader indices and increased recessionary concerns reduce the likelihood of a near-term rally ” for homebuilders nationwide.


Sales of new homes have been hit particularly hard due to the ongoing credit crunch as well as falling home prices causing a growing glut of newly built yet vacant homes on the market.


Shares in local lenders Countrywide Financial Corp. and IndyMac Bancorp were also hit by the Monday downgrades, losing 6.7 percent to $9.03 and 11 percent to $8.01, respectively. Shares in Calabasas-based Countrywide lost 20 percent last week while shares in Pasadena-based IndyMac lost 12 percent.


For the year, shares in KB Home have lost 61 percent while Ryland has seen 63 percent of its share value disappear. Countrywide and Fremont have lost 79 percent and 83 percent, respectively.

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