News Column

Homebuilder Shares Slide on Interest Rate Worries

November 8, 2013

Associated Press

Homebuilder shares dipped on worries about interest rates (file photo)

LOS ANGELES (AP) — Shares of homebuilders were trading lower on Friday, as better-than-expected job data stoked investor concerns that the Federal Reserve could soon roll back stimulus efforts that have helped keep mortgage interest rates near historic lows.

Employers added 204,000 jobs last month, despite the government being partly shut down for 16 days, the Labor Department reported. The latest data also included revised figures showing employers added far more jobs in August and September than previously thought.

The government also reported that the nation's unemployment rate inched up to 7.3 percent from 7.2 percent in September. But that increase was likely because furloughed federal workers were temporarily counted as unemployed.

The latest employment data came a day after the government estimated that the U.S. economy expanded at an annual rate of 2.8 percent in the July-September quarter.

The spate of positive economic news has stirred fresh concerns among investors that the Fed could begin tapering its efforts to stimulate the economy as early as next month.

The central bank has been buying $85 billion of bonds every month to hold down interest rates and encourage hiring and borrowing. But it signaled in May that it might start reducing the bond purchases should the economy continue to strengthen. That sent interest rates higher this summer. Some builders reported a slowdown in sales as the rates started to rise.

Mortgage rates have been falling since September when the Fed surprised investors by keeping its bond-buying levels unchanged.

But that could change if the Fed interprets the recent economic data as reason to begin easing on its economic stimulus efforts.

In a research note Friday, Nomura Securities economist Lewis Alexander wrote that the improved job numbers have made it more likely that the Fed will reduce the pace of bond purchases as early as next month. He estimates there's a 25 percent chance the Fed will take action in December or March, but a 35 percent probability that it will happen in January.

Here's a look at how some homebuilder shares were faring in afternoon trading on Friday:

— PulteGroup Inc. fell 77 cents to $16.74.

— DR Horton Inc. declined 51 cents to $18.04.

— Lennar Corp. slid $1.67 to $32.57.

— KB Home shed 62 cents to $15.91.

— Toll Brothers Inc. fell 70 cents to $31.98.

— Beazer Homes USA Inc. slipped 10 cents to $19.04.

— Hovnanian Enterprises Inc. dipped 3 cents to $4.93.

— Ryland Group Inc. declined $2.04 to $36.52.

— Meritage Homes Corp. fell $1.58 to $41.68.

— Standard Pacific Corp. dipped 13 cents to $7.29.

— MDC Holdings Inc. shed 75 cents to $27.62.

— M/I Homes Inc. fell 19 cents to $19.68.

— NVR Inc. declined $5.84 to $926.

— UCP Inc. shed 33 cents to $13.68.

— TRI Pointe Homes Inc. dipped 3 cents to $16.60.

—Taylor Morrison Home Corp. slipped 5 cents to $20.78.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Source: Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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