On 6 July, the 10 year note yielded 5.22%. Today it yields 4.82%, down 0.4% in 6 weeks. With about a 7 duration that means the price also went up about 3%.
In the same period PHM went basically sideways, from 28.5 to 29.25, up 3%.
Oh and one quarter's worth of pretax earnings, with no increase required, is about 5%, the same as bonds give in a year.
At these prices, earnings have to fall off a cliff just to hold it down. If they fell by half then these companies would still be earning twice their cost of capital.
People are supposed to run out and buy government paper instead?
Yes the boom is over. Yes earnings are not going to rocket higher and will probably fall significantly. Yes house prices might stop rising or even fall 20%.
But the world won't end, people will still want houses to live in, somebody will still have to make them, and whoever does so will still be paid. The fed will continue to let the banks print money every time the economy slows, and houses won't be created quite as easily.
5 or 10 years from now, the perfect time to buy into these may in retrospect be a year from now rather than today. But anybody who averages in after they are down by half from their peaks, is going to do fine.