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StockBeat: Homebuilders Wobble on Weak Housing Data

Investing.com - Homebuilders were hit Tuesday, with KB Home set to report results after the bell.

Ahead of the crucial spring selling season, U.S. housing starts fell 8.7%, the second-biggest monthly decline since November 2016. Building permits, a key indicator of U.S. housing production, fell 1.6%, the second-straight monthly decline, denting sentiment on homebuilders even as analysts touted signs of green shoots in homebuying demand.

"(S)tarts were likely depressed due to the weather, there have been signs in recent months that housing demand may be perking up a bit in response to positive income trends, cooling home price appreciation, and a drop in mortgage rates," Amherst said in a note.

Mortgage rates fell by 3 basis points to 4.28% in the week ending March 21, according to data released last week by Freddie Mac.

The dour data on housing comes ahead of KB Home's fiscal first-quarter results due after market close. Ahead of the results, some analysts have expressed optimism. KB Home (NYSE:KBH) fell 0.67%.

"We particularly like the set up for KBH into tomorrow's print," analyst Jack Micenko at Susquehanna said on Monday. "The focus will be on orders and we think they will come in better than consensus."

Deliveries for the quarter are expected to come in at 2,187 units, with new orders forecast at 2,576, according to FactSet consensus.

DR Horton (NYSE:DHI) fell 1.9% and Lennar (NYSE:LEN), which reports results on Wednesday before U.S. markets open, fell 0.7%.

The SPDR S&P Homebuilders (NYSE:XHB) ETF fell 0.3%.

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