The housing sector took a dip as Bank of America Merrill Lynch downgraded movers and shakers in the homebuilder sector, including Toll Brothers, PulteGroup and NVR.

“This morning BofA Merrill Lynch’s US economics team lowered its 2018-2019 housing starts and new home sales forecasts and thus we slightly temper our macro housing assumptions,” said analyst John Lovallo.

Homebuilder ETFs were down like the iShares US Home Construction ETF (BATS: ITB), SPDR S&P Homebuilders ETF (NYSEArca: XHB) and the Invesco Dynamic Building & Construction ETF (NYSEArca: PKB). ITB was down 1.13%, XHB fell 1.27% and PKB slipped 0.89%.

Yesterday, the Commerce Department revealed that housing starts by fell 5.3% in September, which was more than analyst expectations. Per Marketwatch, “Builders broke ground on fewer homes in September, and applied for fewer permits to start future projects, another signal that residential construction faces daunting headwinds that will limit the supply of new housing stock.”

“The pace of single family home building has slowed over the past 4 months,” said Peter Boockvar, chief investment officer of The Bleakley Advisory Group, in a note. “Price inflation along with higher mortgage rates has turned off interested buyers.”

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