Wed, December 11, 2024
[ Wed, Dec 11th 2024 ]: Forbes
6 Best Value Stocks To Buy In 2025

Barclays cuts homebuilding stocks on flattening home prices, elevated incentives

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Barclays (LON:BARC) on Wednesday downgraded the ratings of some U.S. homebuilding stocks DR Horton Inc (NYSE:DHI), Lennar Corporation (NYSE:LEN), PulteGroup Inc (NYSE:PHM) and KB Home (NYSE:KBH) from Overweight to Equal Weight as it expects
Barclays has downgraded several homebuilding stocks due to concerns over flattening home prices and the increased use of incentives to spur sales. Analyst Sandeep Deshpande highlighted that despite a robust demand for housing, the sector faces challenges from high mortgage rates and a lack of existing home inventory, which has not translated into price growth as expected. Instead, builders are offering more incentives, which could pressure profit margins. Consequently, Barclays has reduced its ratings on stocks like Toll Brothers, PulteGroup, and KB Home, while maintaining an Equal Weight rating on Lennar and D.R. Horton, citing their better positioning in terms of land and pricing power. The bank also lowered its price targets for these companies, reflecting a cautious outlook on the sector's near-term performance.

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