- Banc of America notes their June survey of real estate agents indicated that housing trends worsened from already-weak levels. Firm now expects a 48% decline in earnings in '07 and a 72% decline in '08 based on the weak trends and our expectations for the future. They continue to see downside in the stocks and would not yet look for value opportunities, despite the weakness.
An even higher percentage of agents noted that the time needed to sell a home increased in June. This 'time to sell' index declined to 14.7 from 16.3 in May and is generally a good leading indicator. Firm thinks this points to further pressure on home prices.
An even higher percentage of agents noted that the time needed to sell a home increased in June. This 'time to sell' index declined to 14.7 from 16.3 in May and is generally a good leading indicator. Firm thinks this points to further pressure on home prices.
Stocks mentioned in the note include: WCI, SPF, RYL, NVR, PHM, MTH, HOV, DHI and CHCI. I highlight Pulte Homes (NYSE:PHM) that had its target cut to $26 from $32, impying 8.2% downside to target. Maintains Neutral. Firm notes Pulte is unique from its significant penetration in the active adult segment through its 2001 acquisition of Del Webb. However, they expect Pulte's earnings to decline slightly more than its peers due to its large exposure to markets where affordability is stretched.
Notablecalls: It looks like the builders have some more downside in them. I'd keep an eye on PHM today.
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