Homebuilder Stocks, ETFs Pounded by Another Downgrade

Shares of home improvement retailers and homebuilders equities tumbled Wednesday after another analyst downgraded the sector, weighing on the related exchange traded funds in the process.

Credit Suisse’s Seth Sigman downgraded a slew of well-known home improvement retailers and homebuilders, sending shares of the iShares U.S. Home Construction ETF (NYSEArca: ITB), the largest homebuilders ETF by assets, lower by more than 2%. ITB is off 12.61% over the past month, extending its year-to-date loss to over 25%.

“Housing stocks fell broadly Wednesday after analysts at Credit Suisse lowered their ratings and price targets on several companies in the sector because of fears of rising interest rates. A drop in housing starts data also weighed on the stocks,” reports CNBC. “Home Depot and Lowe’s dropped 4.6 percent and 3.1 percent, respectively; Floor & Decor Holdings and Meritage Homes fell at least 4 percent and KB Home and Lennar pulled back at least 2 percent.”

Another Offender

The SPDR S&P Homebuilders ETF (NYSEArca: XHB) was also punished Wednesday, losing nearly 2% to push its 2018 loss to 19.50%.

XHB features significant exposure to consumer discretionary and retail stocks that are tied to the residential real estate trade.