NEW YORK (AP) -- Shares of homebuilders fell Tuesday as analysts at Raymond James downgraded three major companies in the sector, saying shares are overvalued and noting uncertain prospects for U.S. home sales in the spring.
The analysts led by lowered their ratings for Lennar Corp. to "Outperform" from "Strong Buy," for St. Joe Co. to "Perform" from "Outperform," and for KB Home to "Underperform" from "Market Perform."
The analysts said in a research note that they're still optimistic that the housing market will improve modestly this year. However, they said, the combination of anticipated higher interest rates, continued dampened availability of mortgages, and price increases for new homes from 2013 will tamp down housing demand this year. They affirmed their "Strong Buy" rating on Toll Brothers Inc., saying demand for more-expensive homes remains strong because of tight supply.
Toll Brothers shares rose 16 cents, or 0.4 percent, to $36.42 in afternoon trading.
Recent data have suggested a pause in the housing market's recovery, and average U.S. rates for fixed mortgages fell last week. Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan declined to 4.23 percent from 4.32 percent the previous week. The rate was at 4.23 percent Tuesday afternoon.
Real estate data provider CoreLogic reported last week that home prices slipped from November to December, and the year-over-year increase slowed, likely a result of weaker sales at the end of last year. It was the third straight month-to-month drop. Home prices had risen for eight straight months through September.
Shares of Lennar slipped 8 cents, or 0.2 percent, to $40.81. St. Joe shares fell 40 cents, or 2.2 percent, to $18.25 and KB Home declined 27 cents, or 1.4 percent, to $18.61.
How some other homebuilders were faring in afternoon trading as the broader market rose:
Beazer Homes USA Inc.: Down 9 cents, or 0.4 percent, to $21.28
Hovnanian Enterprises Inc.: Down 1 cent, or 0.2 percent, to $5.83
PulteGroup Inc.: Up 27 cents, or 1.4 percent, to $19.62
DR Horton Inc.: Down 11 cents, or 0.5 percent, to $23.44
NVR Inc.: Down $6.83, or 0.6 percent, to $1,171.91.