New York (AP) — Shares of homebuilders slid Wednesday after data showed home loan applications fell to the lowest level in 14 years.
Goldman Sachs analysts downgraded the entire sector, saying the recovery in housing is slowing.
Analysts cut their rating on homebuilders to “Neutral” from “Attractive” because “a looming slowdown in U.S. growth and correspondingly sluggish home sales (are) not a backdrop for outperformance.”
Pollard said stocks of homebuilders will be pressured until fears of a “double-dip” recession ease.
The data on housing is getting worse as unemployment remains high and consumer confidence weak. On Wednesday, the Mortgage Bankers Association reported its index tracking applications for home purchase loans fell to the lowest level since December 1996, even though mortgage rates are at their lowest in nearly 40 years.
The number of buyers who signed contracts to purchase homes tumbled 30 percent in May from April to the lowest point since 2001, according to the National Association of Realtors earlier this month.
New home sales in May dropped 33 percent to the slowest pace in the 47 years that records have been kept, according to the Commerce Department.