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Homebuilders cry 'uncle'

Nov. 09, 2018 9:44 AM ETKBH, PHG, TOL, DHI, LENBy: Stephen Alpher, SA News Editor

Noting "uncertainty" about recent market conditions. D.R. Horton (NYSE:DHI) in its earnings call yesterday declined to provide full-year fiscal 2019 guidance. CEO Donald Horton took note of "moderation of demand ... particularly at higher price points."Shaken homebuilder investors didn't need a lot more than that, sending DHI shares down 9%, and peers like Toll Brothers (NYSE:TOL), Lennar (NYSE:LEN), Pulte (NYSE:PHG), and KB Home (NYSE:KBHlower by 2.5-3.5%.

D.R. Horton: High prices and rising rates take a toll

It's not just a homebuyers strike, but, judging by the actions of D.R. Horton, builders are pulling back as well. In lieu of stocking up on lots, the company boosted its dividend by 20% to $0.15 per share, and bought back $52.6M in stock last quarter (and $127.5M for the fiscal year).

Meanwhile, the FOMC concluded its November meeting yesterday. While the central bankers left rates unchanged, the group was decidedly unimpressed by October's downward market volatility and the cries for help from the likes of the homebuilders. Another rate hike in December seems a near certainty.

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