Bank of America Merrill Lynch downgraded homebuilder stocks Toll Brothers, PulteGroup and NVR and lowered its homebuilding estimates for 2018 and 2019. "This morning BofA Merrill Lynch's US economics team lowered its 2018-2019 housing starts and new home sales forecasts and thus we slightly temper our macro housing assumptions," analyst John Lovallo said in a note Thursday. Lovallo downgraded Toll Brothers, PulteGroup and NVR shares to neutral from buy. He also lowered his price target on Toll Brothers to $38 a share from $47. The analyst trimmed his target on PulteGroup shares to $28 from $32 and NVR to $2,850 from $3,060. NVR shares skidded 3.8 percent, Toll Brothers shares rose 0.4 percent and PulteGroup fell 1.7 percent Thursday. The downgrades and Bank of America's reduced estimates for housing starts came after the Commerce Department said Wednesday that building permits fell 5.3 percent last month, more than expected. Analysts at Credit Suisse downgraded homebuilding stocks, along with Home Depot and Lowe's, earlier this week on higher rates hurting housing demand. Homebuilders have been under pressure in October. Bank of America now expects housing starts to total 1.26 million this year and 1.3 million next year. As of Wednesday's close, Toll Brothers' stock had fallen more than 5 percent this month and more than 25 percent this year.
By: Fred Imbert | CNBC.com
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Post By: Michelle Cumberbatch
Real Estate Agent
DRE #: 02035511