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Don't Buy Homebuilding Stocks

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  • Description

    MKM Partners homebuilding analyst Megan McGrath explains why you shouldn't jump into housing.

  • Duration 3:03
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-- -- -- it'd take a look right now the homebuilders sector a lot of these stocks have jumped bank afternoon numbers came out this morning showing home construction last month.

Hit the highest level in over four years but we're joined right now by analyst is -- now's not the time.

For your -- stocks Megan McGrath and camp partners executive director home building analyst.

It's here he just downgraded DR Warren you -- would know are from -- and to a neutral these are incredibly.

Strong performers this year make and what's going up well that's exactly why we downgrade and let's remember that the market anticipates the moves.

In the fundamentals and let's not forget feed -- are -- more than doubled in the past year.

So all we're saying is we're not bearish on housing all we're saying is that we think the big move has -- happens.

And so there's not allow much more room to go but even if you look at look at -- -- -- -- this year reasoning on uphold the -- 162%.

That stock is higher year to date right now.

M -- homes KB home a 129%.

But at the same time.

We keep getting every month -- data from the Commerce Department that showed stronger permits stronger construction starts -- mean.

Why would -- continue.

I think the U army -- growth is gonna continue -- what we think over the next couple of months is that you're gonna see it starts to celebrate a little bit.

And over the long term a very key predictor of how these things trade -- the growth rate.

In home sales and starts and we think that growth rate it's gonna start to follow a little bit naturally we're getting into a different seasonal period.

We're hitting the time last year when they really started to to boost stock if you -- in the -- -- just -- we really started to see this move up.

So we think peace is gonna -- and we don't see anything else coming in to take its place like growth and margins or.

Better at CNN to really boosting stocks -- so we think the next six months herself he could seem flatten out.

Okay okay would look at a couple of things here because you had -- -- resurgent broker research what are they saying on the front lines across the country when it comes to housing 25% -- brokers.

Said that the third quarter traffic.

Was half year that was actually a positive from the brokers -- percent saying that they had deals that were canceled dis credit the still issue.

Credit is a really big issue and -- actually what went up from last quarter in terms of we asked them how many canceled and why why did they cancel.

And lack of financing do appraisals was the number one reason -- this quarter.

-- lack of financing -- other -- -- the second biggest so financing is still a huge problem you know 41% of brokers say that mortgages are harder to get now for their clients.

Been six months ago I have to say that he's the data really surprise me make -- Yeah I don't think it's getting -- matter and it doesn't seem to be easing and -- we've seen that with the senior offs or loan survey from the Fed that comes out once a quarter also.

We're seeing it basically flat not getting much better and I think we need that ended 2013 if you wanna buy these -- if you're feeling bullish on housing.

You need that's -- -- and I know that I.

I us -- quick 64% of brokers say that homes closed below.

The listing -- 64% surprise is -- -- -- be down yet we're really surprised by that he's the Dana that and you.

Megan McGrath thank you very much are arrogant you.

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