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The Ratings Game: Homebuilder stocks get a downgrade, as housing market flashes warning signs

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Which way is the housing market going?

Economic data is sending mixed signals. And now so are stocks.

Last week, analysts at Wedbush upgraded their home builder view, noting that with hearty consumer demand for housing, a supportive economy, low rates, and “reasonable” valuations, “investors should be willing to pay a higher multiple” for homebuilder stocks.

Not so fast, said a Raymond James analyst on Tuesday.

Read: Housing starts slip, but permits rise as all signs point to stronger growth ahead

“Ahead of next week’s earnings reports from Lennar LEN, -0.96% and KB Home KBH, -1.41% , we are highlighting our increased near-term caution with the homebuilding sector by preemptively lowering ratings on the aforementioned names,” Buck Horne wrote.

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