“We expect builder fundamentals to moderate over the next two years, which include a continued softer order growth rate in 2H18 and gross margins peaking over the next 12 months,” Rehaut said.
Furthermore, mortgage rates have increased to a four-month high and housing stats rose more than expected in August, but builder permits, an indicator for future activity, declined at the fastest rate since May 2017, MarketWatch reports.
“Ultimately, though, while valuation may have begun to limit incremental downside risk in the group…we believe a combination of improved fundamentals and alleviated cyclical concerns are necessary for any material rebound in the group,” Rehaut added.
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