Investing.com – D.R. Horton's quarterly report and bearish outlook underscored the wobbly backdrop for U.S. housing activity, triggering a wave of selling across homebuilders.
DR Horton (NYSE:DHI) fell the most in more than three years, before paring some losses, after posting fiscal-fourth revenue that fell short of estimates, while earnings were roughly in line.
In a further sign that the sun continues to set on the U.S. housing market, D.R. Horton warned of slowing order growth, adding that the market for homes is getting “choppy.” Its shares fell more than 5%.
Lennar (NYSE:LEN) fell 1%, but was off the lows of the day, as it looked to avoid a third-straight day in the red. The homebuilder's shares had been on a downward spiral since October following its cut to full-year guidance, but found its footing, albeit briefly, following an ratings upgrade from Wedbush a little over a week ago.
Wedbush upgraded its rating on Lennar to outperform from neutral on expectations that the homebuilder would rid its income statement of a "lingering distraction" by selling Rialto to Stone Point Capital.
Lennar agreed to sell Rialto Management Business to investment funds managed by Stone Point Capital for $340 million in late October.
KB Home (NYSE:KBH) also added to the weakness in the broader homebuilders sector, slipping 1%, but remained well off session lows.
U.S. homebuilders are expected to remain in focus as market participants await a Federal Reserve rate decision due late Thursday for further clues that a December rate hike remains on the table.
Rising interest rates have wreaked havoc on the housing sector, boosting mortgage rates above the 5% threshold in October for the first time since early 2011, reining in home-buying activity.