Homebuilder exchange traded funds were higher Thursday following an upbeat Chicago PMI report as the sector ETFs shook off a decline in KB Home (NYSE: KBH) after the builder was downgraded at Ticonderoga Securities.

KB Home was cut to neutral from buy at Ticonderoga as the analysts said the builder needs to focus less on growth and more on profitability and its balance sheet, according to Minyanville.com.

The stock was down more than 2% after trading lower Wednesday on disappointing quarterly results. [Builder ETFs Down after KB Home, Pending Sales]

SPDR S&P Homebuilders (NYSEArca: XHB) and iShares DJ US Home Construction (NYSEArca: ITB) were both fractionally higher Thursday.

“KB Home’s management team mentioned in a conference call Wednesday that it was evaluating the potential of raising capital,” Morningstar analysts said in a note Thursday. “It gave no indication of the timing of any such deal, nor whether it was leaning toward tapping the debt or equity markets. The company’s options in this regard aren’t very good.”

iShares DJ US Home Construction

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